UAE economy has evolved from when it depended solely on subsidence to the modern days when it is driven by innovation. Economic development in the UAE has been growing steadily, thanks to its massive petroleum deposits and oil revenues. Apart from oil, the UAE’s economy depends on other resources like tourism. The availability of revenues, however, rides on suitable development policies and strategies by the country aimed at spurring it to even greater heights. The marvelous economic growth and development has made the UAE a center of focus for economic diversification among policymakers. The following discussion argues that economic development in the UAE has impacted the country, both positively and negatively, posed challenges and presented opportunities to leaders and policymakers, and influenced the domestic and international security.
Overview of the UAE Economic Development
The UAE’s economy, number two in the Arab world, is expected to grow by up to 3.2% by the year 2021[1] The UAE GDP as of 2018 stood at $414,179 million, making it the 30th in the world.[2] The expected GDP growth is 3.5% by 2019.[3] Even in the face of steady and sure growth, the government continues to implement several other initiatives and policies aimed at maintaining the rate or even increase it. The federal government has joined hands with the local governments in the Dh50 billion economic stimulus package to improve the business environment in the country and raise the non-oil GDP[4] Improving both the oil and non-oil GDP will ensure that the overall GDP of the UAE climbs in leaps and bounds over the coming years, making it a world economic powerhouse in the level of countries like the U.S. and China.
Impacts of Economic Growth on the UAE
One of the major impacts of this economic growth in the UAE is a proportional growth in the population. Economic growth comes with the need for investors, job creation, and improved standards of living. As a result, people from other countries have moved to the UAE to exploit the opportunities that come with economic prosperity. In 2018, South Asian expatriates made up 59.5%, while India accounted for 27.5% of the foreign population in the UAE.[5] In 2001, the total population of the UAE was a measly 3 million people, which grew massively to 9.6 million by the year 2015.[6] The increase was a result of favorable monetary and trade policies, which attracted foreign investors and workers. Groups of skilled and unskilled workers thronged the emirates because the growing economy needed labor force, which the local population could not satisfy.
Ideally, while the population increase supported and sustained economic growth, it negatively affected the country. As foreigners flocked into the UAE, the labor force market was slowly getting saturated. At some point, when the labor market is unable to sustain the influx of workers, the surplus population would remain unemployed. Part of the surplus population that decides to stay or settle in the country may raise its unemployment rate, which increases ills associated with the lack of jobs like crime rate. Similarly, foreigners come with their own cultural and religious beliefs, thus, diluting the UAE’s culture. It is important to note that the mixture of culture may come with positive and negative impacts. When analyzed from the perspective of a country wanting to preserve its way of life, the influx and cultural influence could be detrimental.
Concerning the economy and living standards, the growth has led to fiscal dividend, higher purchasing power, and decent living conditions. Economic growth is synonymous with the reduction of poverty, thereby making the living standards of the people better. Additionally, it develops social amenities like hospitals and schools and makes it easier for the populace to afford them. Compared to years before the economy of the UAE begun to grow steadily, the citizens now have a higher purchasing power. This trend is attributable to more jobs that have been created and increased disposable income. The disposable income has enabled the Emiratis to increase their spending and purchasing power. On the same note, a higher fiscal dividend, through raised but favorable taxes, has optimized the government's spending on welfare initiatives. The result is that most of this money flows back to the economy, creating a self-generating effect where growth can be achieved internally.
Conversely, the growth that is expected to improve the country’s welfare is the same one threatening its existence. Just as fast as the economy is growing, cases of environmental pollution have become rampant alongside the associated health issues as a result of numerous power stations and the number of motor vehicles. Dubai is ranked the 10th most polluted in the world, with the population increasingly suffering from upper respiratory tract infections.[7] In fact, it is suspected that environmental pollution is the dominant force behind most of the cardiovascular and respiratory tract health conditions in the UAE. In what seems to be slowly spiraling out of control, these diseases are top health concerns in the region whose economic growth is not slowing down any time soon. The government has, therefore, embarked on pumping huge amounts of money into combating and managing these diseases and their root cause. It is important to note that a sick population is detrimental to a country as the health sector is stretched, and the labor-force industry suffers.
Challenges to Policy Makers
When an economy grows as fast as that of the UAE, leaders and policymakers are under pressure to sustain it or support its growth. More opportunities are created, which the leaders are often keen to exploit. In some cases, these opportunities may be overlooked as the pressure shifts focus to the creation of effective policies. The two significant opportunities that the growth has presented to the leaders include employment and industrial development opportunities. Arguably, the UAE is among the regions doing exceptionally well in lowering its rate of unemployment. In 2018, Dubai had only a 0.5% unemployment rate, which ranks it as the lowest in the world.[8] One of the significant policies driving this trend was the immigration policy, which only allowed people of working-age and with work to settle in the UAE. The policy implementers ensure that no one of working age is allowed to stay in the country without a job. The employment policy saw the region see a higher economic participation rate from its population. It is important to note that this unemployment rate covers even non-Emiratis or foreigners. Information from the Dubai Statistics Centre (DSC) placed the estimated number of unemployed people in the Emirate at only 10,468 in 2018.[9] Closely related to employment opportunities is the ability to manage crimes. As more people get absorbed into the labor force, crime rates reduce.
Another opportunity presented to the leaders entails industrial development. The petroleum industry has long been the one driving the UAE economy. However, petroleum gets depleted with each barrel produced, making the industry a non-sustainable one. As a result, the government of the UAE has embarked on a strategy that helps them use oil and gas revenues to create other more sustainable industries, which will ensure that the rate of economic growth does not slump in the absence of oil and gas in the future. One of the industries that have benefited from related initiatives is the tourism sector. The Emirate of Dubai, in particular, is currently advancing the ‘Destination Dubai’ strategy, which aims at developing the tourism industry and encouraging tourists to visit the region.[10] Through this and other initiatives, Dubai is slowly becoming a favorite tourist destination in the UAE and even the MENA region. People from other countries flock into the Emirate for shopping and desert tours. The accommodation sector has been developed, with some of the most luxurious hotels in the world found in Dubai.
Influence on Domestic and International Security
From the domestic security perspective, economic development has come with both positive and negative influences. On one hand, lower poverty and unemployment rate has ensured that most people are taking part in the labor force and have little time to engage in crime. As already been noted, a tiny percentage of people in the UAE are unemployed, which means a shallow rate of crime. Just a minuscule percentage of those that have no employment can take part in criminal activities. Similarly, as more money flows into the economy, causing steady growth, the government is able to strengthen its security sector. Just like in other areas, like healthcare and education, the UAE government is able to allocate enough funds in strengthening its internal security systems. The money is used in the acquisition and proper remuneration of personnel, as well as the purchase of modern security instruments and weapons. Part of the money also goes into the development and maintenance of technology meant to bolster domestic security and ensure a law-abiding country. As a result of the economic growth, the country is now, more than ever, able to improve its domestic security and protect its citizens from any form of criminal activity.
While national security is a major factor in economic development, the outcome is counterproductive. That is, economic growth has a negative influence on domestic security. An upward trend in the economy is often associated with globalization and high Foreign Direct Investment. Essentially, this points to increased trade and a free flow of people within a country. As noted above, the population of the UAE has increased double fold in the last decade, thanks to economic growth. The unhinged human movement into a country means increased opportunities for crime.[11] The types of crime range from economic to social. In fact, this movement has the potential of facilitating terrorism in the region. The immigration into the UAE, which is mostly pegged on one’s ability to work, ignores other fundamental aspects like security. Criminals can seize this opportunity, therefore, undermining national security. On a global scale, the free flow of human capital in the UAE could also invite terrorists to create operational bases in the region as they facilitate their crimes throughout the world. Fighting terrorism on a global scale requires stronger domestic security in individual countries. On a brighter side, though, the UAE has the lowest unemployment and crime rate with similar ripple effects on international security.
Conclusion
The discussion sought to establish how economic development in the UAE has impacted the country, both positively and negatively, the challenges and presented opportunities to leaders and policymakers, and how it influenced the domestic and international security. From the discussion above, it is evident that the UAE’s economy will continue to grow into the unforeseeable future. Notably, the growth has impacted the country positively through decent living conditions and job creation. However, it has led to population growth, which has its demerits, such as elevated crime rates from the unemployed. Additionally, it has presented the regional leaders with an exclusive opportunity to strengthen other sectors of the economy for sustenance. Lastly, the economic growth in the UAE has positive and negative influences on both domestic and international security, pegged on its vulnerability to terrorism activities.