UAE; Economic Status and development

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Economic Status and development of the UAE between 1970's to 1980's

When anybody enters the boards of UAE and sees the amazing development and prosperity in economy, education and tourism. He just wonders how did it become such a country and what is the economical status and determinants of the industry. Well, this is what I am going to cover in this research. The research is mainly about the economic status before 1970's and after to 1980's. In addition, a historical background before the federation and oil exploration will be provided.

Historical Background

The history is very essential and worth to be mentioned because the history is an extension of the past and we should learn the past in order to learn from our mistakes and avoid the same problems if we face them in the future. As Sheikh Zayed Said

“He who does not know his past cannot make the best of his present and future, for it is from the past that we learn.”

The determinants of the industry in the past were mainly pearls, husbandry, and fishing. Pearl industry was the prime industry in the trucial states. Statistics show that 22,000 men work during the summer for exploring pearls out of the sea and send them to India where there they travel for 10 days in the sea and stay couple of months in India to sell them to Indian merchants. Indian merchants who used to re-export them to other countries as luxurious materials to Europe. The question is why the trucial states were just exporting for India only. However, there are other countries that demanded them also. Well, at that time, the British presence blocked the trucial states from exporting to Europe in order to get the benefit from it. British and India had a big relationships together. From my point of view, they were technically merged together by the India East Company that had a very strong political power. This industry was not reserved by an individual's but it was for all the people and that was respected by the pearling communities.(1)

(1) Fahīm, Muḥammad ʻAbd al-Jalīl. From rags to riches : a story of Abu Dhabi. London : London Centre for Arab Studies, 1995. Pp, 25.

Pearl industry was fluctuating. Sometimes, people make a lot of money out of it and sometimes they just manage to have the low income. (1)When that happens people seek for other opportunities temporarily such as, fishing, firing. Pearl industry declined in the beginning of 1930's because of the appeal of the artificial pearls and so India stopped demanding for them. The area of the coastal city began to be decline. Finally, there is quote that states the importance of pearl industry.

“ In face of the Facts it does not seem unreasonable to hold all sources of profit here are subsidiary to pearl diving, and that if the pearl banks were to fail this coast would be depopulated”. Lorimer (2).

Husbandry in the UAE was important and was largely depending on camels. Camels have great capability to sustain without water for three months in the winter and two or three days in the summer. So, it was the most important factor of the husbandry and transportation. People used them to travel from the coastal cities to other oases such as Liwa and Buraimi oasis.(2)

As the trucial states lies on 540 kilometers on the water, fishing was important at that time. People in the coast depended on the fish as a main source of eating. However, internal places couldn't have the benefit of fresh fishes because of the extremely high temperature. Dates were not sufficient for all the population so people were also importing dates from IRAQ.(2)

(1) Abdulrahman, Abdullah. A'lE'marat fe d'akerat A'bna2ha: al h'aya al ektesadeyah. Dubai: alkera'a lel jameea', 1990.

(2) Heard-Bey, Frauke. from trucial states to United Arab Emirates. London: Motivate Publishing, 2006. Pp, 164-183.

Regarding oil, Oil was discovered in 1911 by British company called (APOC) in Iran. In 1932, Oil standard company of California (SOCAL) discovered oil in high quantities in Bahrain. In 1930's, lots of activities for searching for oil was done by two competitors which are British and United States.(1) There is a problem which is that British was in charge of the gulf and they somehow decreased the speed of development that the gulf would have because they were blocking any other intruder from exploring oil like the united states. The same policy was used in pearl industry in the past. All of that was stopped or paused because of the second world war and then was continued after the war.

Oil was discovered in Abu Dhabi in 1958 in the reign of sheikh Shakhbut. Sheikh Shakhbut was depending on the British and he preferred to save the oil revenues rather that investing them in the development. Sheikh Zayed took his brother's place after a decision came from Al-Nahyan rulers and with the assistance of the British.(2)

Prior to the federation, the currency was different in Abu Dhabi from other sheikhdoms. The currency was in Abu Dhabi Bahrain Dinar (BD), while, in the other sheikhdoms they used the Qatar\Bahrain Riyal(QDR).(3)

In 1968, The British announced that they will withdraw and that gave the potential to sheikh Zayed to begin the transformation of the trucial states to the United Arab Emirates.

(1) Heard-Bey, Frauke. from trucial states to United Arab Emirates. London: Motivate Publishing, 2006. Pp, 164-183. (2) Fahīm, Muḥammad ʻAbd al-Jalīl. From rags to riches : a story of Abu Dhabi. London : London Centre for Arab Studies, 1995. Ch, 6.

(3) El Mallakh, Ragaei. The economic development of the United Arab Emirates. New York: St. Martin's Press, 1981. Pp, 132.

1970 - 1980's

Upon the British withdrawal from the UAE and the formation of the federation, followed by an increase in the oil production and a boost in the prices in 1973. Obviously, such conditions would increase the economical status. Sheikh Zayed and the government contributed to increase the prosperity of the nation by investing the money in the people, infrastructure and services. Some people at that time criticized that the government wasted lots of money unwisely.

From my point of view, that was not that much because according to statistics that will be shown later in the research, there were a steady increase in the GDP and Non-Oil GDP. But that was also probably true because each emirate was independent from the other one economically although there were a federal government. There were no organization or an integrated economic plan for all the emirates. Besides, each emirate was competing with the other which caused a duality in the production sectors in each emirate and lots of resources was wasted as a result. (1)

Also, British were in charge of everything politically and economically before the federation and they put the trucial states totally in isolation for ensuring the safety of the Indian trade routes.(2) They left the country with no experience or education which left the government on a very hard critical situation. (2)

In 1973, the current currency was officially adopted by the assistance of the international body. Initially, the value was 0.186621 grams of fine gold.(3)

(1) Markez Derasat alweh'da alarabiah. altjarb alouhdouiah ala'rbiah alma'asrah: tjrbah doulah alamarat ala'rbiah almthdah. c1999. Pp, 395.

(2) Asad, Rizvi, S. N. From tents to high rise: Economic Development of the United Arab Emirates, 1993.Pp, 664.

(3) El Mallakh, Ragaei. The economic development of the United Arab Emirates. New York: St. Martin's Press, 1981.Pp, 132.

Here is some of the important Oil events from 1970 to 1980's.

In 1973, Abu Dhabi founded the Abu Dhabi distribution Company which is related to ADNOC. In 1974, Government made policy in which it made limits for the exploit of oil in order to use it wisely.

In 1977, was the golden year in UAE industrialized development, in which 84 new industrialized firm were added.(1)

In 1978, Government Founded (ADCO) and distributed 60% shares for ADNOC and 40% for the founders of truce coast limited and Abu Dhabi limited .(1)

In Dubai the American company, Oil Continental was the dominator

The Economical status in the UAE from 1970's to 1980's is summarized using 1.(2) C:\Users\User\Desktop\new university\emirates society\omar\gdp . 75-86 economic development in the gulf.bmp From the above, the GPD between 1975 to 1986 had an overall increase. It was rising sharply between 1975 to 1977, then it decreased slightly in 1978 and kept incrementing gradually until 1981. After 1981, Oil prices declined sharply which affected the oil and non-oil GDP because 90% of the exports at that time was from oil.

(1) Markez Derasat alweh'da alarabiah. altjarb alouhdouiah ala'rbiah alma'asrah: tjrbah doulah alamarat ala'rbiah almthdah. c1999. Pp, 395.

(2) MERI Report-UAE;(London: University of Pennsylvania, Croom Helm,1915), p.134. Economic Intelligence Unit, country profile UAE, 1988-89,p.12.

(3) Hamed, Ahmad. Dawlat Al-Emarat Al A'rabeyah Al-motah'eda: khamsat A'shar A'aman A'la t'areeq Al-Benaa' wal taqadom (1971-1986). Abu Dhabi: Wazarat Al-ea'lam wal thaqafa, 1986.

All the economy was depending on oil and there were no alternatives. UAE crude Oil production was reduced in percentage of 11.7% in 1981 compared to 1980 and it continued to fall until 1986 after the recovery.(2) Therefore, UAE had a very severe impact on the socio-economic life. But that was beneficial because it caused the government to be aware of that issue. The government oriented to diversify the economy by diversifying the industry and production. And that was the birth of diversification although there were some other resources before but with inconsiderable importance compared to the period after the oil recovery. The proof of the increase in depending on other resources will be analyzed from 2. (1)

We can learn from this two important points. Firstly, Non-Oil GDP had an overall increase and it decreased in 1980 because of the oil recession. Secondly, we can see that between 1970 to 1980, the Non-Oil GDP increased but consistently and slightly but after the oil recession and recovery, we can analyze clearly that the Non-Oil GDP was increasing dramatically and that was a proof in the Non-Oil awareness.

(1) Yasmin, judi. Forecasting the Non - Oil GDP in the United Arab Emirates by Using ARIMA Models. International Review of Business Research Papers. Pp.162-183.

(2) Hamed, Ahmad. Dawlat Al-Emarat Al A'rabeyah Al-motah'eda: khamsat A'shar A'aman A'la t'areeq Al-Benaa' wal taqadom (1971-1986). Abu Dhabi: Wazarat Al-ea'lam wal thaqafa, 1986.

The birth of diversification

Industry

Manufacturing GDP increased steadily but remained low compared to the Oil GDP. It was 3.5% in 1978 and increased to 10.68 in 1987.(1) this was done by making and constructing several industrialized projects around the UAE. Here are some of the most important projects in the UAE.

* Ruwais Zone

Located 100 miles west of Abu Dhabi and it is the former oil export terminal of jabil Dhanna.(2) it contains the following

- Hydro-cracking technology.

- Desalination.

- independent electric generators for the zone.

- Working on airstrips and the construction infrastructure projects.

* Jabil Ali:

Jabil Ali is located in Dubai. The construction began in 1976 and was finished in 1979. It has 67 births equipped with highly technological equipment and contains fifty thousand meters square of ware Housing. An important project in Jabil Ali is the Dubai Aluminum (DUBAL).(2)

Currently, The Abu Dhabi Government-owned company, Mubadala is taking the lead towards an industry that is mostly independent from Oil and Gas.

(1) Asad, Rizvi, S. N. From tents to high rise: Economic Development of the United Arab Emirates,(1993). Pp, 671.

(2) El Mallakh, Ragaei. The economic development of the United Arab Emirates. New York: St. Martin's Press, 1981. Pp, 669.

Agriculture

Agriculture is an important field in the UAE because the majority of UAE citizens work in it and it contributes to fulfill 20% of the population needs.(1)

The leadership cared about this industry in order to have more than one source of income, يحافظ on the natural resources in the land and to create a good conditions that will keep the national farmers in that field. (2)

Sheikh Zayed also had a green vision in which he likes to make everything green. He offered and ease the job for the people who work in this industry by offering free lands, making the lands leveled for them, easing the policies and regulations, buying the products at a favorable prices and marketing them.

Statistics show that Ras Al-Khaima had 71% of lands that contain vegetables and produce 52% of the vegetables production in the UAE . (2)

Agriculture, livestock and fishing GDP was contributing 0.6% from the whole GDP in 1978 to be 1.9% in 1987.(3)

Here is some statistics for the development in the agriculture field between 1972 to 1984.(4)

* An increase in the grown land 60%.

* An Increase in the production 16 times.

* Chicken production increased 3 times.

“They used to say that agriculture has no future [in the UAE], but with God's blessing and our determination, we have succeeded in transforming this desert "into a green land". Sheikh Zayed.

(1) Hamed, Ahmad. Dawlat Al-Emarat Al A'rabeyah Al-motah'eda: khamsat A'shar A'aman A'la t'areeq Al-Benaa' wal taqadom (1971-1986). Abu Dhabi: Wazarat Al-ea'lam wal thaqafa, 1986.

(2) Markez Derasat alweh'da alarabiah. altjarb alouhdouiah ala'rbiah alma'asrah: tjrbah doulah alamarat ala'rbiah almthdah. c1999. Pp, 399.

(3) Asad, Rizvi, S. N. From tents to high rise: Economic Development of the United Arab Emirates,(1993). Pp, 668.

Outcomes and results in the UAE.

* Political Stability.

* Social & Economic Infrastructure.

* Educational institutions.

* Health Services.

The effects of the economic development on the integration between the seven emirates and the social life.

The economic development in the UAE accelerated the integration between the seven emirates. Because of the development, the infrastructure of the UAE was built in all the emirates, Transportation routes were built between all the emirates and education and medical services were also implemented. all of that contributed to make the UAE citizens integrated.

The problem is that upon the formation of the federation, each emirate owns its own resources and it doesn't belong to the other emirate according to the constitution. (3) that caused a competition between the emirates and that caused an des-organization between the emirates which caused a duality in sectors that make the same tasks. All of that is reason for wasting the natural resources. Another problem is that there is an interference between the money of the state and the ruler of that state.(3) because according to the agreements that has been taken in 1820 and 1916 that give the rulers certain boarders (4) which I think that was the reason why there is an interference between the ruler and the state's income. that logically, can be a disadvantage to a state and beneficial to another which would cause a difference in the speed of the growth in each emirate and as mentioned before a duality in the production and services sectors.(3) From my point of view, the economic development in all the sectors required to more labors to work in the field. So, lots of foreign labors and investors came in order to cope up with the development. That caused to weaken the language and the traditions.

(3) Markez Derasat alweh'da alarabiah. altjarb alouhdouiah ala'rbiah alma'asrah: tjrbah doulah alamarat ala'rbiah almthdah. c1999. Pp, 405-408.

(4) federal research division. United Arab Emirates: a country study. Washington, DC. Pp, 61-63.

conclusion

lots of countries around the world have rich natural resources and money revenues. However, they didn't develop and grow in the speed of the United Arab Emirates. And that indicates that there is another important factor that had contributed to grasp the development and grow the economics in the UAE. Our leader sheikh Zayed and the wise government that dedicated them self for the sake of the nation. As we see, we can witness the development that the UAE had made by seeing the literacy rate, services and the extraordinary contributions and aids to the other countries. UAE has been the helper to many countries whether they are Arab or not. Over the years, billions of dollars in public and private contributions were made to meet the Palestinian humanitarian, social, political and military needs.

Prior to 1991 war, UAE contributed 2.5 $ dollars to Palestine cause.

Also, In addition to contributors made directly to Palestinian authorities. UAE is an active participant in the donors conference where it pledged 18 million in 1998 and 25 $ million for infrastructure projects in 1998. (1)

(1) Kechichain, A. Joseph. A century in thirty years: Shaykh Zayed and the United Arab Emirates. Washington, DC: Middle east policy council.

Bibliography

(1) Fahīm, Muḥammad ʻAbd al-Jalīl. From rags to riches : a story of Abu Dhabi. London : London Centre for Arab Studies, 1995.

(2) Abdulrahman, Abdullah. A'lE'marat fe d'akerat A'bna2ha: al h'aya al ektesadeyah. Dubai: alkera'a lel jameea', 1990.

(3) Heard-Bey, Frauke. from trucial states to United Arab Emirates. London: Motivate Publishing, 2006.

(4) Markez Derasat alweh'da alarabiah. altjarb alouhdouiah ala'rbiah alma'asrah: tjrbah doulah alamarat ala'rbiah almthdah. c1999.

(5) El Mallakh, Ragaei. The economic development of the United Arab Emirates. New York: St. Martin's Press, 1981.

(6) Hamed, Ahmad. Dawlat Al-Emarat Al A'rabeyah Al-motah'eda: khamsat A'shar A'aman A'la t'areeq Al-Benaa' wal taqadom (1971-1986). Abu Dhabi: Wazarat Al-ea'lam wal thaqafa, 1986.

(7) MERI Report-UAE;(London: University of Pennsylvania, Croom Helm,1915),Economic Intelligence Unit, country profile UAE, 1988-89.

(8) Yasmin, judi. Forecasting the Non - Oil GDP in the United Arab Emirates by Using ARIMA Models. International Review of Business Research Papers.

(9) Federal Research Division. United Arab Emirates: a country study. Washington, DC, 1993.

(10) Asad, Rizvi, S. N. From tents to high rise: Economic Development of the United Arab Emirates, 1993.

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