Development Levels of United Arab Emirates
United Arab Emirates (UAE) is among the most developed countries in the world with a very high Gross Domestic Product (GDP) in the Middle East. The country has very high human development index. Moreover, the country has been ranked among the highest growing economies in the world.
Furthermore, the country has high per capita income than most developed countries (Zaman 4). The country has also high consumption levels both private and public. Moreover, the country enjoys a positive current account balances because of the high incomes from the oil sector.
Contribution of Natural Factors and Human Capital
The country has vast deposits of petroleum products that have been critical in the development of the country. Oil products usually fetch high income to a country and they have ready market throughout the world. Moreover, the country is situated in a strategic position that makes it a tourist attraction center. It is important to note that the country has invested a lot of money on the education sector. Graduates, high school dropouts as well as the adults are included in the program that is aimed at increasing the productivity of people (Rostin 6).
This has been highly beneficial for the country. In addition, the government has heavily invested in research and development leading to increased development. On the same note, the government has implemented policies that has made establishment of companies very easy thus encouraging both local and foreign investors
Effects of Environmental Externalities and Income Inequality
UAE has invested heavily in the oil industry and many people work in this sector. This industry has led to the establishment of other industries that majorly come up to offer services to people who work in the oil industry. Moreover, the presence of oil in the UAE has been quite critical in the development of the manufacturing and service sectors that are very vibrant currently. These industries have been vital in enhancing the development of the United Arab Emirates.
However, there is also the problem of pollution that results from the many industries that have been established (Bazoobandi 78). On the other hand, there is a lot of inequality in the UAE which hinder even development in the country. Some emirates have very low incomes and as a result, they are lowly developed compared to others. Furthermore, other people earn very high incomes and enjoy high living standards while others earn lowly leading to high disparities.
Contribution of other Development Factors
The country has very good transport system both road and air transport. Most of the places are connected through roads as well as by air. The country’s airline, Emirates airline, is among the largest airlines in the world. The country is also in the coastline and has one of the best ports in the world. Telecommunication sector is also advanced with many people having access to phone and the internet (Zaman 6). However, there are other emirates that have poor road networks due to underdevelopment compared to others.
The country adheres to the Islam rules and culture. Most people in the country observe the Islam code of dressing. Nevertheless, the country is tolerant to other religions given the fact that it has many foreigners working there. This has been a positive factor that attracts foreign expatriates to the country (Bazoobandi 83).
Tolerance in religion and culture has also been advantageous in the development of the tourism industry. Nonetheless, the government still requires local majority ownership in every firm established in the country. This protectionist tendency has discouraged some potential investors who would not want to dilute ownership of their firm. Income inequalities have also contributed to imbalanced development both among people and among emirates.
Development Assistance Given and Government Policy
UAE issues a lot of money in form of foreign aid to developing countries and in case of disasters as well as during emergence cases. In year 2010, the country gave $792.2 million that comprised 2.7% of its GDP as foreign aid (Bazoobandi 79). On the same note, the country receives a lot of money in form of foreign direct investment with the oil industry being the largest beneficiary.
Arguably, the government’s policy is aimed at increasing exports, a reason as to why investment is directed to manufacturing and the service sector (Aldosari 120). There have been efforts to advance the micro-credit finance to serve people but still many people cannot access the services. Moreover, small and inefficient institutions offer the services.
Possible Solution to Achieve High Development
Respect of human rights is crucial in attraction of investors. Consequently, the government will have to protect human rights in order to attract foreign investors. Moreover, the government should try to reduce the income disparities that have prevailed in the country to increase economic development.
Furthermore, the country needs to enhance its efforts in diversifying its economy to avoid shocks in case of crises in the oil industry. More importantly, the government will have to revisit its stand on the local ownership of any firm established locally to attract more foreign investors.
Works Cited
Aldosari, Ali. Middle East, Western Asia and Northern Africa. Singapore: Marshall Cavendish, 2007. Print.
Bazoobandi, Sara. The Political Economy of the Gulf Sovereign Wealth Funds: A Case Study of Iran, Kuwait, Saudi Arabia and the United Arab Emirates. New York: Routledge, 2013. Print.
Rostin, Andreas. Structural Changes in the United Arab Emirates. Munchen: GRIN Verlag, 2007. Print.
Zaman, Nadeem UZ. UAE and Globalization-Attracting Foreign Investments. Munchen: GRIN Verlag, 2011. Print.