Post-Oil Economies: Opportunities and Threats

Executive Summary

  • Diversification is central to the economic development of all member-states of the Gulf Co-operation Council (GCC). The United Arab Emirates (UAE) has led the way through early recognition and acknowledgement that oil dependency is neither socially desirable nor economically sustainable over the long term.
  • The UAE has forged a programme of economic reform that aims to utilise the near-term benefits of oil revenues to stimulate the development and expansion of new and ultimately more sustainable streams of economic activity. This is now being followed by other Gulf states – most obviously Saudi Arabia’s ‘Vision 2030’ post-oil strategy.
  • The leadership of the UAE long ago recognised that the abundance of its oil wealth can be a ‘double-edged sword’: a source of immense public wealth but also the cause of potential societal complacency and economic stagnation.
  • The UAE’s ‘Vision 2021’ was launched in 2010. The strategy set six national priorities intended to consolidate a sustainable and wealth-generating economy with reducing dependence on oil. These are:
    • Cohesive Society and Preserved Identity
    • Safe Public and Fair Judiciary
    • Competitive Knowledge Economy
    • First-Rate Education System
    • World-Class Healthcare
    • Sustainable Environment and Infrastructure.
  • The Knowledge Economy pillar of UAE Vision 2021 focuses on: “the UAE becoming the economic, touristic and commercial capital for more than two billion people by transitioning to a knowledge-based economy, promoting innovation and research and development, strengthening the regulatory framework for key sectors, and encouraging high value-adding sectors.”
  • Both the UAE and Saudi Arabia have embraced the World Bank’s concept of a Knowledge Economy as the foundation for long-term economic growth. This concept is founded on the four pillars of: education, innovation, information and communication technology.
  • The UAE has also taken a leading role in enhancing the position of women in society and in the workplace. Over the past two decades, women have become increasingly prominent at the highest levels of power and the UAE Cabinet presently includes nine women out of a total of 32.
  • In the UAE, leaders have placed particular emphasis on the importance of education in so-called STEM (Science, Technology, Engineering and Mathematics) subjects. Alongside this, innovation and the development of an entrepreneurial private sector is manifest in the development of new, high-tech industries, including: renewable energy, nuclear, aerospace, defence manufacturing and the UAE’s ambition to become the first Arab nation to mount a space mission to Mars.
  • Of particular note, the UAE is providing a leading example to the region in developing strong tourism and cultural sectors in its post-oil diversification. As the recent opening in Abu Dhabi of the first branch of the Louvre Museum outside France has illustrated, the UAE not only sees its cultural development as an important component of its national heritage but also as a means of bridging international understanding of the Islamic Gulf to the wider world.
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