By Rikke Klüver Voll
As Saudi Arabia fears for it oil longevity and the prospect of becoming an oil importer as early as 2030, United Arab Emirates (UAE) stands as a shining example poised for post-oil survival. Like others in the Gulf region UAE quickly saw that the oil wealth transforming the country both socially and economically was not a finite commodity. Continuing its impressive lifestyle depending on oil resources alone was not a likely strategy. To reassure financial survival without reliance on nonrenewable resources became a driving force to develop alternative strategies for growth in the UAE. From the beginning of UAE’s oil adventure in 1962, Abu Dhabi immediately implemented measures to use the recent wealth to create thriving construction sectors and business, and attract regional and international tourism.
The main approaches taken by the UAE to survive a post-oil world consist of diversifying the economy and global integration. UAE early redirected its resources into education, healthcare and construction of new cities, real estate and tourism projects. Most importantly, the newly acquired infrastructure facilitated the government’s plans for attracting foreign investors. UAE has excelled in communications, airport-infrastructure, mega real estate projects, re-export commerce and tourism, strategically moving the economy away from dependence on oil.
Listed as the best trade-enabler in the region by the World Economic Forum, attracting foreign investment remained a core line for UAE to overcome oil-dependency. Seeing the necessity of external trade for continued growth free zones were established to create hubs for international financial activity. In addition freehold property ownership was introduced, formally an alien concept in the region. Altogether, these strategies created a mosaic curbing the effects of oil price fluctuations, and leading to vigorous economic growth. Increases in foreign trade confirm the strategies’ success I strengthening the UAE economy.
Another focus point in Dubai, and increasingly in Abu Dhabi, appears to be alternative sources of energy. In two weeks, Dubai is planed to host the World Energy Forum focusing on renewable energy and overcoming oil-dependency. This is the first time the meeting is hosted outside the UN Headquarters in New York, and the choice of Dubai as the venue was clear. Dubai invests a lot in alternative and green research. Developing alternative energy solutions has long been a priority for the UAE, and they are now pioneers in the region.
Many of these strategies mainly take place in Dubai, as this emirate largely due to low oil reserves began its post-oil preparations early. Nevertheless, UAE aspires to take advantage of each of the emirates’ individual assets. Focusing on communication, commercial and financial sectors in Dubai, energy-based industries in Abu Dhabi, manufacturing in Sharjah, and agriculture, shipping, quarrying and cement in the Northern Emirates. UAE is efficiently making use of its different comparative advantages.
The Gulf region is looking to UAE for economic survival strategies and the world might soon be learning from its success as well. However, the UAE needs to remain watchful of global shocks and continue to strengthen its resilience. To continually reduce its vulnerability the UAE needs to make real efforts to better the quality of its education system, and to integrate its nationals into its workforce. Mainly by making the private sector more attractive to Emiratis, and Emiratis more attractive to the private sector. Continued efforts to advance in the field of renewable energy will continue to put UAE on the map both economically and environmentally.