Introduction
United Arab Emirates (UAE) was formed in 1971 as a confederation comprised of seven emirates. The states forming UAE include; Abu Dhabi, Dubai, Ajman, Fujairah, Ras al Khaimah, and Umm al Qaiwain. The economy of UAE was first based on fishing and pearling industry before the discovery of oil.
Abu Dhabi became the first state to export oil in the year 1962, after which others followed. The oil industry has since attracted a number of foreign workers which accounted for almost three-quarters of the population (United Arab Emirates, 2010).
United Arab Emirates has been operating on high and rising oil prices, as well as healthy growth in property markets since the start of the 21st century. The economy is approximated to be growing at an average rate of 7% p. a. from the year 2000 to 2007.
In their bid to develop a stabilized economy which does not fully rely on energy resources, the country embarked for re-investing assets in the country at local and federal levels (EIU, 2005a). The assets are in form of public-private partnerships, infrastructure, education and training. The country faces several challenges from political, environmental, social and economic.
External threats of geopolitical instability which encompasses unresolved inter-cultural and national ties could lead to some negative impact. Internal threats range from social and political imbalances, increasing rates of unemployment and income distribution.
The United Arab Emirates is a currently which is recorded to undergo tremendous expansion with the governments focused on investing proceeds from high oil prices.
Frequent tourists visits are largely influenced by the nature of environment based on political stability. The level of value attached to recreation destinations has significant contribution towards tourism industry worldwide (United Arab Emirates, 2010).
Tourism is definitely one of the fastest growing sectors of economy in the UAE. However, records reveal that the sector has experienced unlimited economic analysis. There are numerous business entities operating within the same industry, such as transport, hotel and hospitality which make such economic assessment appear tricky.
Tourism contributes significantly into community development since the sector offers numerous employment opportunities. The employment sector within the industry accommodates various areas of expertise skilled and unskilled.
Attraction sites within remote areas should be identified and developed by the government since this could be used to open up avenues for investment activities.
Remote regions are at the same time known to be rich in social and cultural heritage, hence they could be utilized through development of tourism industry. Such development always lead to change in living standards (EIU, 2005a; United Arab Emirates, 2010).
What type of economy is the UAE? List the features that are typical of this type of economy and provide a detailed discussion as to why you have chosen this classification.
The United Arab Emirates is considered to have an industrialized and open kind of economy making the country to be one of the most developed countries in the world. Such categorization is based on various factors, such as GDP indicators and the level of energy consumption per capita.
In the year 2006, the GDP of the UAE was approximated to be around $ 168 billion making the country to be ranked third in the Middle East-North Africa region. Reports indicated that nominal GDP recorded an increase of 35% in the year 2006 (United Arab Emirates, 2010).
In terms of basic economy, the country rates among the highest income providers in the world. Owing to decline in oil prices, the government has opted to diversify the national economy which has ultimately led to the growth of industries, construction, free trade zones, transportation, tourism, fisheries, commerce, as well as communications.
Such investments have helped in reducing the country’s heavy dependence on oil. Positive results were recorded in 1998 when the gross domestic product from non-oil sector was estimated to be at 70%. The cost of living in the UAE is average, since the majority of the population can be identified as enjoying high standard of living.
Housing, as well as food rates within the country, are comparable to that in the United Kingdom with the housing unit offering housing allowance alongside employment package and private healthcare to individuals. Residents of the UAE are provided with healthcare services free of charge or at times charged very low fee (EIU, 2005a).
Tourism industry has grown for decades within the UAE making tourism one of the fastest improving industries within the country. Reports indicate that UAE has resorted to improving their tourist attraction centers, including building infrastructure for the purposes of accommodating huge number of tourists in future.
Tremendous improvements have been realized within the sector, with records showing positive annual growth. Tourism, though serving as pleasure market, has played vital role in impacting economy of the UAE.
The industry is considered a demand-led and has notable influence on other sectors of economy, such as hotel and hospitality industry. Tourism has brought lots of benefits to employment sector, as well as contributing positively to gross domestic product and acting as one of the foreign exchange earners (United Arab Emirates, 2010).
What are the stated tourism goals of the UAE and what is the current economic impact of tourism on the UAE economy?
The tourism sector in the UAE received a boost between the years 2001 and 2009; the increase was estimated to be at 168%. The tourism sector had an approximated economic impact of around Dhs69 billion between the period 2001 and 2010.
The impact included income from capital investments as well as direct and indirect income from other sectors. Statistics revealed that tourism alone contributed up to 7.4% of the total Gross Domestic Product of UAE and over 11% of the Gross National Product. Amongst the seven states Dubai recorded the highest percentage of the tourism economy contributing between 66-67% followed by Abu Dhabi at around 16%.
Despite all the gains deflation which arose from the global financial crisis in 2009 affected the industry to a smaller extent. Between 2001 and 2002 the tourism growth for UAE was approximated at 25% (EIU, 2005a).
The current tourism goals within the UAE include development of new Travel and Tourism resorts expected to create a new look within the country’s Travel and Tourism economy.
Various projects which are underway in the sector include investment in the Palms, the Marina, the Waterfront, Dubai-land, as well as Festival City Land. This would enable the destination to accommodate increased number of visitors (EIU, 2005a).
Intra-Arab tourism was initiated after the 9/11 attacks in the US, there was a tremendous downfall in tourism after the attacks. Strategy had to be implemented to help the UAE and other Arab countries recover quickly owing to their ability to attract tourists from the same region, hence reducing heavy dependence on the foreign markets, especially the West.
Tourism has formed one of the major providers of employment opportunities, as well as has been a major foreign exchange earner of the country. The gains from tourism sector have been relied upon for the purposes of implementing liberalization reforms. Direct and indirect contributions of tourism in the middle-east accounted for 9% of the total employment in the recent past (United Arab Emirates, 2010).
United Arab Emirates Travel & Tourism industry accounted for approximately 2% of the total employment in the year 2005, the indirect and direct impact on the economy incorporating spillover employment from industry capital investment and spending from the government accounted for 12% of total employment opportunities (Henderson, 2006).
The forecast table below shows the nature of responsiveness to the current transformation of the tourism industry within the UAE. It takes into account the latest data on visitors’ arrivals and spending.
The data in the table shows the revised forecast as having two-fold increase in the number of visitors within the next subsequent years. The government, on the other hand, predicts a target of around 15 million visitors by the year 2020 (Henderson, 2006).
Table 1: Tourism Industry Forecast
Identify and discuss the main reasons for government expenditure on the facilitation and promotion of tourism in Dubai and critically analyze how this differs from other UAE emirates.
One of the reasons for government expenditure on promotion of tourism in Dubai is the presence of infrastructure and proper planning, as well as marketing (EIU, 2005c). Dubai has not yet imposed restrictive entry procedures like other states that view western culture as incompatible with the Islamic Religion way of life.
Dubai, at the same time, possesses some key attributes such as stability, its easily accessible and presence of superb socials amenities. Dubai has got one of the largest international airports in the region and, at the same time, has got a number of tourist attraction centers which include; beaches, cities, oases, mountain and desert landscapes, ancient civilizations, as well as nature reserves (EIU, 2005c).
Dubai has got capacity of surmounting inhibitors of tourism operating within other areas in the Middle East. It is one of the entrepots in the region and well known for its financial and commercial prowess within the region. It has created numerous free-trade zones, as well as Industrial parks connected to the internet and media.
The state is considered to be a cosmopolitan and Liberal, hence providing little threats and cases of civil unrest, as well as low crime rates. Though the country is a Muslim state, other religious practices besides Islam are allowed and, at the same time, it is opened to outside influences as opposed to other UAE states (Bousaa, 2003).
The state also boasts of wider federation policies, and has positioned itself in western markets as a secure centre with numerous beach tourism locations and vast alternatives on shopping, as well as cultural and natural attraction centers. Development of the Hospitality industry has been boosted by the lenient rules concerning land leasing and ownership which favors many investors (Bousaa, 2003).
Development of Dubai as a tourism destination is still a continuing process and will largely depend upon favorable circumstances which could, however, be a subject for uncertainty. According to the government, the large demand would be contained through expansion of transport sector including airports (Bousaa, 2003).
There is the challenge of maintaining high growth rate through construction of expensive hotels and leisure centers. The government has to make lots of efforts in establishing tourism industry that is economically viable and environmentally sustainable.
Unique features in Dubai have been marketed in such a way that it drives away fear in tourists and entice them to a region that is mostly associated with insecurity based on terrorism attacks (Henderson, 2006).
Examine the social and cultural benefits and disincentives of tourism in relation to the UAE and provide a conclusion based upon your findings.
There are common contrasts in expectations concerning cultural behaviors of tourists from the West and those from Arab world. All these should be appreciated, and the conflicts that might arise wisely managed. In terms of social set-up, the country has got low rates of unemployment cases, as well as numerous semi-skilled youth workers.
The social system has largely been affected by low literacy rates, as well as scarce educational facilities since the government’s budget expenditure in education records have been very low. Private sector is recorded to be the highest employer of foreign labor making labor force to account for 75% of the total work force within the UAE.
A majority of the workers are flooding into the construction sector in Dubai which is experiencing high growth rate. Low literacy levels within the UAE present one of the major obstacles to its tourism expansion, because there is a lack of highly skilled labor which could fit into different development sectors (Henderson, 2006).
There is increased pressure on the healthcare infrastructure due to increased number of tourists and immigrants.
This has led to the creation of tax-free zones in the health sector hence attracting pharmaceutical and biotech companies, one of the tax-free zones known as Dubai Healthcare City (DHCC) has attracted major medical clinics and pharmaceutical suppliers, such as Johnson & Johnson (Henderson, 2006).
Concerning individual rights, UAE has got no rules championing for freedom of expression or association. There are strict conservative rules surrounding the media making it one of the key social issues which require redress by the country since it might cause mass protests which could turn harmful to the tourism industry.
The culture of the UAE is largely dominated by Islam with most of the Emiratis being members of Sunni Sect. Most of the legal matters are controlled by Sharia Law. However, Emiratis seem to bear with other religions practices making immigrants and tourists of other faiths comfortable in enjoying freedom of worship.
They have tolerated other social customs due to the influx of many ethnic groups within the country but, at the same time, managed to maintain their own, which makes them good marketers of their own cultural identity (Bousaa, 2003).
Out of expansive research done on cultural and social impacts on tourism, it can be concluded that much is still required from the government to enable bridge the gap between native citizens and the immigrants. Giving native citizens proper education and other necessities would contribute to the tourism development, since they will make tourists understand their cultural and national heritage better.
Marketers within the tourism sector should utilize the use of internal promotions which could enable easy interactions between natives and tourists, hence creating learning space and comfortable exchange of ideas and skills. This could reinforce identity hence increases the level of enjoyment that accompanies tourism activities within the country (Bousaa, 2003).
Conclusion
The study reveals how exposed weaknesses could possibly be turned into lucrative points when managed in the appropriate way. Technology has allowed the UAE to function as one of the largest tourist destination centers in the world despite climate and other associated geographical impediments.
Economic wealth has allowed development of various industries within the UAE making it one of the most sophisticated countries in terms of infrastructure development and lavish accommodation. Such metropolitan urban centre as Dubai established such immense wealth acts as good attraction sites for tourists.
Implementation of appropriate economic principles and strategies is important to the UAE, since it enables the formation of appropriate pictures on the kind of market and industry tourism entails.
It ensures that tourism sector applies appropriate principles and strategies for the purposes of protecting business entities within the industry from outside threats, such as competition and insecurity. Implementation of the appropriate marketing principles ensures development of social amenities and proper recreation centers which act as some of the major centers frequently visited by tourists.
Taking thorough analysis of the marketing strategies used by already established countries in tourism industry prove to be vital, since competition could be realized from other businesses not related to the tourism industry.
References
Bousaa, D. (2003). Dubai: the Search for Identity. In G. Moser (Ed.),People, Places and Sustainability, Seattle: Hogrefe and Huber.
EIU. (2005a). United Arab Emirates Country Profile 2005. The Economist Intelligence Unit: London.
EIU. (2005c). UAE: Historical data- Dubai tourism. The Economist Intelligence Unit Viewswire, 41
Henderson, J. C. (2006). Tourism in Dubai: Overcoming Barriers to Destination Development. International Journal of Tourism Research, 8, 87-99.
United Arab Emirates. (2010). In-depth PESTLE Insights. Datamonitor Analysis Report, 6, 1-63.