Introduction
The United Arab Emirates (UAE) is currently experiencing a positive economic growth. The UAE has “an economic freedom score of 71.4” (Young, 2014, p. 8). This fact makes the UAE has become one of the freest markets in the globe. The region’s economy has been showing new improvements.
The UAE region has been using powerful incentives in order to support its economic position. According to Young (2014, p. 19), “the UAE’s economy is the second largest in the Middle East”. The region’s GDP stands at 377 trillion US dollars.
The region is currently diversifying its economy. However, the government obtains over 30 percent of its Gross Domestic Product (GDP) from oil. This essay examines the opportunities and challenges associated with the region’s economy.
The Economic Environment of UAE
The economic environment of a region will determine its performance. Many people will invest in every country with a positive economic environment. The economic indicators of the UAE are making the region admirable. Dubai is one of the monarchies forming the United Arab Emirates.
Dubai has become the center of commerce and tourism (Young, 2014). The UAE also offers new incentives to ensure every person achieve his or her goals. For example, the UAE has formed many free trade zones. Such zones encourage many investors to support their business activities. These regions have “zero taxation thus supporting the goals of many entrepreneurs” (Hill, 2011, p. 12).
The UAE offers subsidized services to its people. Many individuals are currently experiencing the best opportunities. The region also exports oil and gas. This economic activity has increased the government’s revenues. The UAE government uses such revenues to support small-scale businesses.
The UAE produces “the best opportunities thus making the region attractive to both local and foreign investors” (Young, 2014, p. 65). This situation explains why many investors are doing business in the UAE. The legal aspects of the UAE continue to support its economy. For instance, the region is not corrupt (Jones, 2005).
The monarchies promote the best judicial practices. The political leadership of the region discourages many business malpractices. This practice is currently promoting the economy of the region. There is “no income tax in the UAE” (Young, 2014, p. 48). This economic situation makes it easier for many individuals to achieve their potentials. The region uses most of its revenues to promote the best economic activities.
The UAE has streamlined most of its business policies. For example, many people can start their businesses within ten days. The process is also “efficient and less costly” (Young, 2014, p. 65). The government supports the best employment regulations. The practice has made it easier for many investors to achieve their goals. Many individuals have managed to launch their businesses within the shortest time possible. Employment laws and regulations are also flexible in the UAE.
The presence of open markets makes the UAE admirable to many investors. The “United Arab Emirates presents an average tariff of 3.7 percent” (Hill, 2011, p. 73). According to many economists, non-tariff issues do not discourage many people from investing in UAE.
Many foreign investors are able to own property in the region. This practice has made it easier for them to achieve their goals. Islamic banking “is also common thus promoting the economic expectations of many entrepreneurs” (Young, 2014, p. 69).
The presence of state-owned banks has made it easier for the region to achieve its goals. It is agreeable that the UAE economy presents a wide range of opportunities. The above strengths will “encourage more investors to focus on the region” (Young, 2014, p. 72).
On the other hand, the economy of the United Arab Emirates faces a number of weaknesses. Such threats have discouraged many individuals from doing business in the region (Young, 2014). To begin with, the region’s income is obtained from gas and oil. The government should therefore diversity its economy in order to achieve the best outcomes. The government can identify new sources of income such as agriculture and tourism.
Many foreigners are “only allowed to own land and property in specific areas” (Hill, 2011, p. 102). This issue discourages many investors from doing business in the UAE. The UAE government should use the best strategies in order to support the needs of these investors. This practice will make the region one of the best business destinations.
The issue of terrorism is a common problem in the United Arab Emirates. The Arab World (AW) is currently associated radicalism. Many Muslims have “been controlling different functions and policies” (Young, 2014, p. 89).
Many “people have been avoiding the region because terrorism is a real challenge” (Young, 2014, p. 173). This problem discourages many people from visiting the UAE. The UAE is also associated with an unpleasant climate. This situation has made it impossible for many individuals to do business in the region.
Conclusion
The United Arab Emirates has a powerful economy. The region is currently diversifying its economic activities n order to become a major player in the globe. The region also obtains its income from different non-oil sectors (Jones, 2005).
The legal frameworks experienced in the UAE are supporting many businesses. This discussion encourages the UAE government to address the major threats affecting its economy. The practice will eventually support UAE’s economy.
Reference List
Hill, C. (2011). International Business, Competing in the Global Market. New York, NY: McGraw-Hill.
Jones, G. (2005). Multinationals and Global Capitalism. New York, NY: Oxford University Press.
Young, K. (2014). The Political Economy of Energy, Finance and Security in the United Arab Emirates. New York, NY: Palgrave Macmillan.