1. 1
ACKNOWLEDGEMENT
I acknowledge with gratitude my indebtness to our Director Dr. Shekhar Chaudhuri
and Principal Dr. Tamal Dutta Chaudhuri along with our course Instructor Dr. Mukta
Mukherjee as well as Faculty who guided me during the Report Study and all the
teachers and staff members of Calcutta Business School for giving me the opportunity
to prepare and guiding me to work on this project, and providing valuable guidance for
preparing this project.
I would like to thanks those people who directly or indirectly help me to enhance my
practical knowledge in the field of commerce and express my sincere gratitude to all
those who share valuable thoughts with me. This is being my first effort, the
possibilities of errors and omissions in its contents and presentation cannot be
completely ruled out. I shall, however, grateful to my teachers, colleagues, parents and
other readers from their suggestions for its improvement.
Thank You.
Aditya Jhunjhunwala
2. 2
INDEX
TOPIC PAGE NO.
INTRODUCTION 3
OVERVIEW OF UAE ECONOMY 4
STRUCTURE CHANGE IN ECONOMY 5
DATA AND METHODOLOGY 6
STARTING A BUSINESS 7
FINDINGS 8 – 10
CONCLUSIONS 11
REFERENCES 11
3. 3
INTRODUCTION
Thirty years ago the UAE was one of the least developed countries of the world.
Today, it has achieved an income level comparable to that of the industrialized nations.
The UAE did not pass through the hypothetical development ‘stages’ that most
developed countries seem to have experienced. Rather, its large oil revenues have
allowed her to leap these stages to the stage of high mass consumption. Massive oil
revenues have enabled the UAE to short-cut the usually difficult and lengthy process
of saving and capital accumulation necessary for economic development. Given an
abundance of natural resource endowments (oil and gas), the UAE has embraced
resource-based industries (RBI) as a development strategy, an industrial strategy that is
based on utilization of natural resources. There has been a deployment of windfall
income, largely directed at a ‘once-and-for-all’ boost to the social and economic
infrastructure, which enabled the UAE to achieve a significant degree of economic
development within the very brief timeframe of 1973 to 1982, a period of relatively
high oil prices. This chapter takes account of the fact that development economics
cannot be separated from the institutional, social, cultural, economic and political
context. It also takes into account the all-important human factor, both as a goal and a
source of economic development.
The Doing Business project provides objective measures of business regulations and
their enforcement across 190 economies and selected cities at the subnational and
regional level. The Doing Business project, launched in 2002, looks at domestic small
and medium-size companies and measures the regulations applying to them through
their life cycle. Doing Business captures several important dimensions of the
regulatory environment as it applies to local rms. It provides quantitative indicators on
regulation for starting a business, dealing with construction permits, getting electricity,
registering property, getting credit, protecting minority investors, paying taxes, trading
across borders, enforcing contracts and resolving insolvency. Doing Business also
measures features of labor market regulation. Although Doing Business does not
present rankings of economies on the labor market regulation indicators or include the
topic in the aggregate distance to frontier score or ranking on the ease of doing
business, it does present the data for these indicators.
OVERVIEW OF UAE ECONOMY
4. 4
UAE has the second-largest economy in the Arab world (after Saudi Arabia), with a
gross domestic product (GDP) of $377 billion (AED1.38 trillion) in 2012. A third of
the GDP is from oil revenues. The economy was expected to grow 4–4.5% in 2013,
compared to 2.3–3.5% over the previous five years. Since independence in 1971,
UAE's economy has grown by nearly 231 times to AED1.45 trillion in 2013. The non-
oil trade has grown to AED1.2 trillion, a growth of around 28 times from 1981 to
2012.
The UAE's economy is one of the most open worldwide, and its history of economic
history goes back to the times when ships sailed to India, along the Swahili coast, as
far south as Mozambique. Current UAE’s GDP is $386.4 Billion while the individual
share is almost 70 thousand dollars.
International Monetary Fund (IMF) expected UAE’s economic growth to increase to
4.5% in 2015, compared to 4.3% in 2014. The IMF ascribed UAE’s potentially strong
economic growth in World Economic Outlook Report to the increased contribution of
non-petroleum sectors, which registered a growth average of more than 6% in 2014
and 2015. Such contribution includes banking, tourism, commerce and real estate.
Increase of Emirati purchasing power and governmental expenditures in infrastructure
projects have considerably increased. Internationally, UAE is ranked among the top 20
for global service business, according to AT Kearney, the top 30 on the WEF “most-
networked countries” and in the top quarter as a least corrupt country per
the TI's corruption index
STRUCTURAL CHANGES IN THE UAE’S ECONOMY
5. 5
Economic development can be perceived as change in the structure of the economy.
Structural change refers to terms such as agricultural transformation, industrialization,
demographic transition, urbanization, transformation of domestic demand and
production, foreign trade, finance, and employment. In considering structural changes
in the UAE’s economy, this chapter intends to identify and describe the pattern of the
UAE’s economic growth and to determine its achieved level of development. In taking
this structural view of the economy, the chapter examines the distinct sectors of
economic activity and how these sectors respond to changes in demand to which the
development process subjects them. This partition of the economy into sectors permits
greater understanding of the problems of development. One clear pattern of the
changing economic structure in the course of economic development is that the share
of industry increases as gross output per capita rises. Following the Second World
War, rapid industrialization was viewed as a prerequisite for modernization and
structural change. The difference in the output and the contribution to GDP of the
industrial sector in developing countries as opposed to its place in developed countries
was seen as the main manifestation of economic backwardness and dependence.
While value added growth rate in the UAE oil sector was fluctuating during the period
1975–1998, the manufacturing sector value added growth rate was steadily increasing.
The manufacturing value added increased considerably from Dh 472 million in 1975 to
Dh 9443 million in 1985, and to Dh 18,855 million in 1998 (at constant prices). Its
contribution to GDP increased significantly from 0.9 per cent in 1975 to 3.8 per cent in
1980, and to 12.4 per cent in
1998. Nonetheless, it is obvious that the substantial increase in the manufacturing
value added has made a modest contribution to the UAE’s total output growth.
Agricultural production increased more than fourfold from 1975 to 1998 at an average
annual growth rate of 12.6 per cent. This consistent increase in the agricultural output
is attributed to the sustained efforts of the UAE’s Government to promote agricultural
development with generous agricultural incentives and subsidies. Changes in the
contribution to GDP of the non-oil sector (agriculture), however, increased at a
moderate rate. In 1998, the agricultural sector comprised about 3.6 per cent of GDP. A
conspicuous sectoral shift and contribution to GDP is evident in the service sector,
commerce (wholesale and retail trade), restaurants, hotels, transport, storage,
communications, finance, insurance, real estates and government services. The service
sector contribution to GDP increased from 22.3 per cent in 1975 to 39.7 per cent in
1998.
DATA AND METHODOLOGY
6. 6
This report gives the overview of the country, UAE. The data used in this report is
secondary data. Before preparing this report, I have made two drafts which depicts the
ease of doing business and merchandise of trade of UAE. After taking out the data of
GDP, Export, Import and various other variables, the graphs are analysed and the
following result can be made about the economy of the country, UAE.
UAE most populous nation, has sought to improve its macroeconomic stability and
develop its poor infrastructure, but severe economic policy distortions and a lack of
transparency in the economic system continue to impair progress. The government also
has struggled to end ongoing security threats in some parts of the country that have
exacerbated poverty and unemployment.
The government’s overreliance on oil, which accounts for over 90 percent of export
earnings, has exposed the economy to major risks amid declining oil prices. Despite
attempts to diversify UAE industries, overall progress has been only marginal. State-
imposed bans on imports have hurt consumers and businesses, and the judicial system
remains vulnerable to corruption.
Trade is moderately important to UAE economy; the value of exports and imports
taken together equals 31 percent of GDP. The average applied tariff rate is 11.3
percent. In general, foreign and domestic investors are treated equally, but the judicial
and regulatory systems impede foreign investment. The banks are highly exposed to
the energy sector, and nonperforming loans have been increasing rapidly
STARTING A BUSINESS
This topic measures the paid-in minimum capital requirement, number of procedures,
time and cost for a small- to medium-sized limited liability company to start up and
7. 7
formally operate in economy’s largest business city. To make the data comparable
across 190 economies, Doing Business uses a standardized business that is 100%
domestically owned, has start-up capital equivalent to 10 times income per capita,
engages in general industrial or commercial activities and employs between 10 and 50
people one month after the commencement of operations, all of whom are domestic
nationals. Starting a Business considers two types of local limited liability companies
that are identical in all aspects, except that one company is owned by 5 married women
and the other by 5 married men. The distance to frontier score for each indicator is the
average of the scores obtained for each of the component indicators
The distance to frontier (DTF) measure shows the distance of each economy to the
“frontier,” which represents the best performance observed on each of the indicators
across all economies in the Doing Business sample since 2005. An economy’s distance
to frontier is reacted on a scale from 0 to 100, where 0 represents the lowest
performance and 100 represents the frontier. The ease of doing business ranking ranges
from 1 to 190.
FINDINGS
FIGURE 1
8. 8
In 2016 the United Arab Emirates imported $184B, making it the 20th largest importer in the
world. During the last five years the imports of the United Arab Emirates have increased at
an annualized rate of 2.95%, from $170B in 2011 to $184B in 2016. The most recent imports
are led by Gold which represent 17.3% of the total imports of the United Arab Emirates,
followed by Diamonds, which account for 6.79%.
FIGURE 2
In 2016 the United Arab Emirates exported $98.8B, making it the 29th largest exporter in the
world. During the last five years the exports of the United Arab Emirates have decreased at
an annualized rate of -0.683%, from $181B in 2011 to $98.8B in 2016. The most recent
exports are led by Gold which represent 15.9% of the total exports of the United Arab
Emirates, followed by Diamonds, which account for 12.4%.
FIGURE 3
0
50000
100000
150000
200000
250000
300000
350000
400000
450000
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020
Yaxis
X X Axis
Change in GDP and Import of goods and services withtime
GDP Imports of goods and services
0
50000
100000
150000
200000
250000
300000
350000
400000
450000
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020
YAxis
X Axis
Change in GDP and Export of goods and services withtime
GDP Exports of goods and services
9. 9
As of 2016 the United Arab Emirates had a negative trade balance of $86B in net imports. As
compared to their trade balance in 1995 when they still had a negative trade balance of
$3.07B in net imports.
FIGURE 4
The Gross Domestic Product (GDP) in the United Arab Emirates was worth 348.74 billion
US dollars in 2016. The GDP value of the United Arab Emirates represents 0.56 percent of
the world economy. GDP in the United Arab Emirates averaged 125.51 USD Billion from
1973 until 2016, reaching an all time high of 403.20 USD Billion in 2014 and a record low of
2.85 USD Billion in 1973.
TABLE: SHOWING EASE OF DOING BUSINESSIN UAE ECONOMY
0
10000
20000
30000
40000
50000
60000
70000
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
YAxis
X Axis
Trade surplus withtime
Trade Surplus
0
50000
100000
150000
200000
250000
300000
350000
400000
450000
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
YAxis
X Axis
Change in GDP and Trade surplus with time
Trade Surplus GDP
10. 10
Economic
Year
Ease of doing
business index
Cost of business
start-up procedures
Time required to
start a business
(days)
Time required to
enforce a contract
(days)
Time to resolve
insolvency (years)
2012 .. 11 8.2 524 ..
2013 .. 11.4 8.2 524 ..
2014 .. 11.3 8.2 524 3.2
2015 34 11.2 8.2 495 3.2
2016 26 13 8.2 495 3.2
FIGURE5
The Doing Business project provides objective measures of business regulations and
their enforcement across 190 economies and selected cities at the subnational and
regional level. The Doing Business project, launched in 2002, looks at domestic small
and medium-size companies and measures the regulations applying to them through
their life cycle. Doing Business captures several important dimensions of the
regulatory environment as it applies to local rms. It provides quantitative indicators on
regulation for starting a business, dealing with construction permits, getting electricity,
registering property, getting credit, protecting minority investors, paying taxes, trading
across borders, enforcing contracts and resolving insolvency. Doing Business also
measures features of labour market regulation. Although Doing Business does not
present rankings of economies on the labour market regulation indicators or include
the topic taken together distance to frontier score or ranking on the ease of doing
business, it does present the data for these indicators.
CONCLUSION
0
5
10
15
20
25
30
35
40
0
2
4
6
8
10
12
14
2011.5 2012 2012.5 2013 2013.5 2014 2014.5 2015 2015.5 2016 2016.5
YAXIS
YAXIS
X AXIS
CHART SHOWING DOING BUSINESS
Cost of business start-up procedures Time required to start a business (days) Ease of doing business index
11. 11
The UAE is a very wealthy country, mainly due to its modest population base and
huge oil resources. The large budget surpluses achieved have enabled the UAE to
accumulate a sizeable current account balance, held mainly by the governments of the
individual emirates and partly by other private establishments. Progress has been
favourable in social and economic development. The successful implementation of
human development policy in the UAE, hand in hand with industrialization,
urbanization and modernization, is one of the rare examples of a country which has
successfully used income from its huge natural resources for its long-term
development over a very short period (from the early 1970s to late 1990s). 258 United
Arab Emirates: a new perspective It is clear that the UAE has achieved impressive
improvements in many social and economic development indicators during the past
three decades. This chapter emphasizes the high levels of human development in UAE,
together with a relatively good record on human rights. These are goals, which must
still be borne in mind in attempts to sustain national development.
REFERENCES
o https://www.uaeinteract.com/uaeint_misc/pdf/perspectives/12.pdf
o http://www.doingbusiness.org/~/media/wbg/doingbusiness/documents/profiles/country/are.pdf
o https://en.wikipedia.org/wiki/Economy_of_the_United_Arab_Emirates
o https://tradingeconomics.com/united-arab-emirates/gdp
o data.worldbank.org
o http://www.doingbusiness.org/data/exploreeconomies/united-arab-emirates
