Foreign Direct Investment
Although the UAE witnessed a drop in FDI in 2009, the increase in the investment flow has been consistent ever since. Furthermore, among FDA recipients, the UAE takes the second lace, which is quite an accomplishment (United Arab Emirates – renewable energy, 2016). According to the recent data, the total investment made in the Park, which is one of the greatest solar energy projects in the world (United Arab Emirates – renewable energy, 2016), has recently amounted to AED 50,000,000,000 (United Arab Emirates – renewable energy, 2016).
Forms of FDI in UAE in the Energy Sector
FDI currently exists in two main forms in the UAE energy sector, i.e., in dividends and retained earnings. At this point, however, one must mention that there has recently been a propensity among the UAE officials to channel FDI into other countries, particularly, Pakistan (UAE, Saudi Arabia lead FDI revival in Pakistan, 2016). The reasons for the identified step are quite evident; with the increase in the investment inflow, Pakistanis bound to focus on consistent economic growth and, thus, become a valuable partner for the UAE.
Traders’ Protection and the UAE International Investors Council
The UAE International Investors Council (2015) insists that the sustainable use of the available financial resources, particularly, FDI, should be viewed as the foundation for enhancing the development of the state industries, especially as far as the energy industry is concerned. Furthermore, to protect foreign investments, the authorities of the UAE compel organizations operating in the industry to sign bilateral investment conventions. Furthermore, UNCTAD has been appointed to manage the controversies that may appear in the course of handling the associated issues. Finally, the International Centre for the Settlement of Investment Disputes (ICSID) has offered its services to intervene occasionally and help manage some of the disputes (United Arab Emirates: Foreign investment, 2016).
International Financial Markets
Current Exchange Rates
According to the information provided by the UAE Exchange Centre, LLC (2016), the exchange rates equal a total of 0.27174 at present. The identified characteristic of the UAE market can be viewed as rather positive. However, given the fact that there has been a slight drop since the past week, it can be assumed that the UAE authorities could focus on issues such as the balance of payment and the government debt. Furthermore, a strategy for the sustainable use of financial resources could be viewed as an option.
UAE Energy Sector and the Global Energy Market
As a rule, the role of the GCC countries, in general, and the UAE, in particular, is defined by their progress in the oil industry to a considerable extent. However, the recent developments in the Solar Industry department are bound to have a tremendous impact on the global energy market as well. With the transfer to e-cars and the emphasis on environmentalism, the transition to the use of solar energy will be viewed as a necessity (The International Renewable Energy Agency, 2016).
Fluctuations of Exchange Rates and Strengths of the UAE Market
Fluctuations in exchange rates have an admittedly adverse effect on the UAE economy and, therefore, on its market. Particularly, a drop in prices and, therefore, in the revenue, can be expected (The UAE Exchange Centre, LLC, 2016). The focus on technological progress, however, can be deemed as an obvious strength of the target market. Furthermore, the fact that the industry attracts a significant number of investments is worth mentioning (United Arab Emirates Ministry of Energy, 2016).
Use the relative strength index and Arms index
The current Relative Strength Index (RSI) amounts to 45, which is a considerably positive sign. The current Arms Index of the energy market in the UAE can be deemed as close to 1 since the target area is under development and, therefore, has a strong potential (Will Uranium ETF continue to glow green amid energy market rout? – ETF news and commentary, 2014).
Other factors
The economic growth of the state is consistent and positive (3.9% in 2016 (Trading Economics, 2016)). The inflation rates can also be deemed as bearable (3.55% (United Arab Emirates: Inflation rate from 2010 to 2020 (compared to the previous year), 2016)), whereas the interest rates have risen significantly (4% (The International Renewable Energy Agency, 2016)). Similarly, the consumer sentiment has witnessed changes, the increase in the commercial one (30%) being the most important to the overall progress (United Arab Emirates Ministry of Energy, 2016).
Technology in International Business
Intellectual Property Rights, Solar Industry, and Political Relations
Intellectual property rights are secured tightly in the UAE (United Arab Emirates – the right to private ownership and establishment, 2016). Therefore, the process of patenting innovative technologies is going to be thorough and nuanced. However, the threat of intellectual property theft will be addressed. With the promotion of Solar Industry development, the UAE is bound to enhance its economic communication process with the USA and Europe. However, differences in legal regulations will have to be managed (United Arab Emirates – the right to private ownership and establishment, 2016).
FDI and International Financial Markets
Finally, the issue of the effects that the international financial markets have on the FDI and the associated processes needs to be mentioned. First and most obvious, an increase in the labor market flexibility needs to be brought up as an essential change (Kern, 2012). Indeed, with the increase in investments, the opportunities for choosing the required labor force rise. Furthermore, in the long term, a rise in the state GDP can be expected due to the extensive financial support provided to the energy industry and its following progress in the global market.
References
The International Renewable Energy Agency. (2016). Renewable energy market analysis. Web.
Kern, S. (2012). GCC financial markets. Web.
Trading Economics. (2016). United Arab Emirates GDP growth rate. Web.
The UAE Exchange Centre, LLC. (2016). Currency exchange rates in United Arab Emirates. Web.
The UAE International Investors Council. (2015). Sustainable development through FDI induced innovation and technology transfer. Web.
UAE, Saudi Arabia lead FDI revival in Pakistan. (2016). Web.
United Arab Emirates: Foreign investment. (2016).Web.
United Arab Emirates: Inflation rate from 2010 to 2020 (compared to previous year). (2016). Web.
United Arab Emirates Ministry of Energy. (2016). UAE state of energy report. Abu Dhabi: UAEME.
United Arab Emirates – renewable energy. (2016). Web.
United Arab Emirates – right to private ownership and establishment. (2016). Web.
Will Uranium ETF continue to glow green amid energy market rout? – ETF news and commentary. (2014). Web.