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Uae Economic And Social Development Economics Essay

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Published: Mon, 5 Dec 2016

UAE is an amalgamation of seven states or Emirates region each of which is governed by the respective emirs or rulers. UAE is now known in the world as one of the most developed nations in the world and boosts a successful social and economic growth. The per capita income of UAE is the seventh highest in the world which is $48,158. GDP of the country is quite strong and as remained consistent for the last two decades because of the rapid urbanization and industrialization of this nation. The UAE sure boosts some impressive economic and social development.

UAE did not achieve this kind of development overnight. It passed through several phases in its timeline and overcame a lot of hurdles that made it one of the greatest states in the world today. To get a better understanding of the social and economic development of UAE, we can observe its history and study its transitional phases. Most of the economists in the world describe that UAE achieved remarkable breakthrough in fields of economics and social sectors. Despite a modest culture of this nation, the social aspects were improved through leaps and bounds which directly contributed to the development of economic sector of this nation.

UAE has attained lot of progress through its timeline. United Nations ranks UAE as the 38th best country in the world to live in which is quite an achievement considering the fact that its rating was very low 30 years back. Natural resources have also helped UAE in achieving successful economic growth as it contains large reservoirs of both oil and natural gas which act as a catalyst in the progress of a nation. The UAE is also placed at the 14th position in order of countries that are best for doing business because of higher success rates of businesses in this federation. The GDP growth rate of UAE is consistent at 3.2% which is moderate considering the latest times.

Stages of Development and History

In order to get a better grip on the growth of economic and social factors in UAE, it is important to get a better understanding of stages of development of these factors. Stages of economic development are better explained by the Rostows Model which gives a better timeline on the progress of a particular economy. We can use this model as a backdrop to explain different economic development stages of UAE and it can give a birds-eye view of the whole situation.

Thirty years ago, UAE was considered as one of the least developed countries with poor GDP and HDI index. However different events in history have helped it to maintain a strong economic growth in the recent times. The first stage in the development was the stability of political and social environment in the UAE. Since the formation of UAE in 1971, it has enjoyed a reign of political stability which has helped the nation to lay basic foundations of economic and social principles. It is important to mention that UAE has maintained a good record on human rights since its inception which has contributed to its social development. The first stage of social development was marked by the event that the ruler of UAE implemented strong human right laws.

The second stage of economic and social development for UAE was the discovery of oil and natural gas resources in the state. Natural resources are cited as one of the most important growth factors in both economic and social sectors as they are responsible for providing the government with funds and resources to implement the best policies in the state. The UAE oil reserves were estimated to be 10% of the total oil reserves of the world. Other mineral resources are also present in the form of rock, sands and oils.

Another stage of economic and social development in UAE was the focused growth in the Agriculture sector. Although agriculture constitutes less than 1.5% of the total GDP, UAE government placed special emphasis on this sector as it is still considered an important constituent. There has been consistent development in this sector for the past 30 years and it has developed in a sizeable industry. Regarding its importance in both economic and social development, UAE government established some policies that aid the individuals in this sector.

Increase in population and labor force was another stage of economic and social development for UAE. Initially, the UAE comprised of very less population and there were only UAE nationals present. However with the discovery of oil and natural gas resources and the construction boom, the population and labor force suddenly exploded because of the new number of opportunities that were aroused. Large chunk of population and labor force came from foreign nations because people were looking for better chances of work and employment opportunities. UAE has benefited a lot from the skills of foreign workers and economists have described this as an important stage of economic and social development.

Economic development can also be attributed to the change in the structure of the economy. The structural change in the economy includes different terms like industrialization, agriculture transformation, urbanization, foreign trade, employment, finance and demographic transformation. It is considered as another important stage of economic and social growth because after all of the above mentioned factors, it is essential that the economic framework be restructured in order to compensate all of the new additions to the social and economic environment. 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. The value added growth for oil in UAE was fluctuating during the period of 1977-1998; the value added growth of manufacturing sector was steadily increasing which presented the UAE with number of different opportunities to capitalize on.

Another important structural change was in the employment pattern of labor in the UAE. Economists cite it as another significant stage of economic and social development that helped launched the UAE social policies to the top spot. Different sectors like trade, restaurants, hotels, transport, storage, communications, finance, insurance, real estate, business services, and community, social and personal services are rated as the most important sources of labor and they have helped in the boom of social development in the country.

Another important stage of economic and social development is the industrialization which is cited as the core reason in the growth of UAE. In UAE transition to the world’s most respected economy, industrialization is cited as the most crucial factor. To some extent industrialization in the UAE has broadened the base of the economy, as shown by increased industrial productivity. Previously there were many constraints for the UAE economy to fully utilize its capability of industrialization but with advancement of stages of social and economic growth, industrialization also grew. Nevertheless, industrialization in the UAE has not reduced significantly the economy’s reliance on oil.

Human Development Indicators in UAE are recognized on two levels namely nationally and internationally. The first level, nationally over time, enables us to explore the rate, structure, and character of human development in the UAE. The latter, internationally, enables us to examine the degree of human development in the UAE compared to both developing and developed countries. Social development is explained in reference to these indicators and it is the later stage of economic and social development.

Impact of Historical events

In the different stages of economic and social development of UAE, there were many historical events that were associated with those stages. The impact of these events cannot be denied on the overall performance of UAE both in terms of economic and social sectors. These historical events present an important phase of the UAE timeline and have not only affected the mentioned country but also other gulf states.

The most important historical event in UAE that also had profound effect on other gulf states was the discovery of oil and natural resources in the 1950s. Although this discovery was made before the formation of federation of UAE, it acted as a base for development when the nation was formed. Other gulf countries like Qatar, Kuwait and Oman also followed some of the principles set forth by the UAE government and procured some of the most beneficial oil deals from large corporations around the world.

Industrialization of UAE in the 80s is also another important historic event that bears similarities with other gulf states. Like the UAE, many other gulf states were also industrialized because they too knew about the importance of industry and the impact of it on the social and economic growth.

It is clear that the UAE has achieved impressive improvements in many social and economic development indicators during the past three decades. The UAE is considered a wealthy country, due to its huge oil resources and modest population. 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 favorable in social and economic development.


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