The United Arab Emirates’ Economic: Alternatives to Oil


The United Arab Emirates is one of the leading oil producers in the Middle East and North Africa (MENA) region. The robust economic growth that the country has experienced over the last four decades is fully attributed to its rich oil fields. The country exports its oil to Europe, the Americas, Africa, and Asia-Pacific. Inasmuch as the country is making attractive profits from its sale of oil, the government has been concerned that the country is overruling on the oil sector.

The government realized that there is a possibility that the country may run out of oil in a near future hence it is necessary to have alternative sources of income that can support economic growth. For the last ten years, the government of the United Arab Emirates has been investing heavily in other sectors of the economy as a way of reducing reliance on oil (Ramcharan 44). Each of the seven emirates has been working semi-autonomously to try and find alternative sources of income.

The primary aim of the United Arab Emirates’ government has been to reduce the level of import and increase its exports to the international community. In this paper, the researcher will look at the alternatives that United Arab Emirates is putting in place to ensure that its economy remains stable even after oil runs out.

Alternatives to Oil

The oil reserves in the United Arab Emirates have been reducing considerably over the past half a century and the government is concerned that it cannot continue relying on this source anymore. A draft of economic policies has been developed in this country over the years that have helped in reducing overreliance on oil exports. It is important to look at some of the alternative economic activities that the country is promoting currently.

Promotion of Tourism

According to Ramcharan (51), the government of the United Arab Emirates has invested heavily in the tourism sector in order to attract global tourists into the country. Heavy investment has been made in constructing some of the most magnificent man-made sceneries in the modern society. A good example is the city of Dubai. A study by Ramcharan (34) revealed that Dubai is currently one of the top tourists’ destinations in the world attracting people from America, Europe, Asia-Pacific, and Africa

. This did not just occur overnight. It was a clearly drawn plan that led to creating of beautiful parks, man-made islands, and other sceneries popular in the modern society. The city of Dubai currently boasts of the tallest building in the world, which is another major tourists’ attraction. The following is a picture of Burj Khalifa, currently the tallest building in the world.

The attractiveness of the city.
The attractiveness of the city.

The figure above shows the attractiveness of the city that makes it a tourist hub that meets global standards. To ensure that tourists are comfortable when they are in the city, road, rail, and communication infrastructure had been significantly improved over the past one decade. Recent statistics show that the effort of the government to invest in the tourism sector is paying off. The following graph shows the contribution that tourism and travel sector has been making in the country’s gross domestic product.

Contribution of tour and travel sector on UAE’s GDP.
Figure 2: Contribution of tour and travel sector on UAE’s GDP.

As shown in the above graph, the contribution of tour and travel sector has significantly increased from 2011 to 2013. It is expected that by year 2023, this sector will be one of the leading income earners for the local economy.

Dubai as a Global Business Hub

According to Low (89), Dubai has taken a leading role in transforming the United Arab Emirates from a country that relies on oil exports to a country that has a diversified economy. Dubai has become one of the leading economic hubs in the region. Most of the manufactured products from China and Japan have their first stop in Dubai before they are spread to other parts of the world. The friendly business environment and limited bottlenecks have made this city very attractive to the investors.

Besides acting as a conduit for exports coming from China and Japan to the rest of the world, the government of Dubai has been promoting its own manufacturing sector. The city has become a major manufacturing center in the region. Leather, confectioneries, and toiletries are some of the main products that Dubai is currently manufacturing and exporting to the global market. The chart below shows some of the major international markets for the products of this firm.

International destinations for Dubai exports.
Figure 3: International destinations for Dubai exports.

Agriculture in Abu Dhabi and other emirates

The government of Abu Dhabi has been majorly investing in agriculture to reduce the overreliance on imports from the rest of the country. The United Arab Emirates has one of the worst climatic conditions for agriculture. Long periods of drought are very common in this country. The Abu Dhabi government has invested heavily in irrigation as a way of supporting local agriculture. This initiative has had massive economic benefit for this country.

According to Ramady (45), ten years ago, the United Arab Emirates was importing over 80% of the agricultural products used locally. However, this has been significantly reduced to less than 10% following the ambitious irrigation projects that the government has initiated. There are some specific agricultural products that the country is exporting to its neighbors such as Saudi Arabia. This was unthinkable ten years ago as the country was considered agriculturally unproductive. Other emirates such as Sharja are also following the same trend by promoting irrigation as a way of developing the agricultural sector.

Transport sector

The government of the United States has invested heavily in the transport sector to help diversify its economy. A report by Greenaway (89) shows that the cities of Dubai and Abu Dhabi have some of the best rail transport in the region. The government has ensured that the road and rail transport are very efficient to support the business class. Air transport is earning attractive income to these two leading emirates in this country.

The Dubai-based Emirates Airline is the leading airline company in the Middle East and North Africa region. It commands a good share of the global market. Etihad Airways based in Abu Dhabi is another major global airline company that is very profitable. Both of these airline companies are fully owned and managed by the governments of Dubai and Abu Dhabi. The income they generate helps in reducing the country’s reliance on oil exports. The country has also been developing water transport to further enhance movement of its people from one island to the other, especially tourists who may want to visit several places.

Reasons behind the Decision

The government of the United Arab Emirates had good reasons that made it find alternative economic solutions. First, the government realized that its oil reserves will not last forever. It meant that if the country continued relying on oil as its major economic income, then the economy may be unsustainable in the near future. The government was also concerned about the volatile oil prices in the international market.

The country would suffer in cases where the price of oil dropped to unprecedented levels. According to Abed (78), another cause of concern for the government has been the increasing promotion of green energy instead of fossil fuel. Firms around the world are struggling to reduce their reliance on oil as a way of protecting nature. If the current trend continues, then the global society will soon be using green energy, a situation that will render oil undesirable. As such, the government is trying to come up with alternatives that can help protect the economy in the near future.

Advantages of the decision

The decision to seek for alternative economic sources of income has a number of advantages. The main advantage is that the United Arab Emirates will no longer be adversely affected by the changing international oil prices because the economy will have other equally strong pillars that can support it. The future of the country’s economy will also be more secure. This is very important as the global society makes a major shift from the use of fossil fuel to clean energy. In Europe and the United States, cars using green energy are already on the road. As Srour (67) says, technology always moves forward and countries should be prepared to see a society that runs on green energy. When such a time comes, the country will have alternative sources of income that will support its economy.

Limitations of the decision

It is important to appreciate that this initiative has some disadvantages worth noting. The shifting focus from the oil sector to other service sector means that the country is not making significant investment in the oil and gas sector. As such, some of the technologies it is using are not modern, exposing the environment to massive pollution. I also believe that the country is now in a hurry to have as much oil exports as possible to get enough funds to support the other economic sectors. I believe this may have serious environmental impacts that may not be easily mitigated.


The decision to diversify the economy of the United Arab Emirates came at the most opportune time. The country is earning billions of dollars every year from the sale of oil and gas. However, it is clear that this rich source of income may not exist for ever. It will come a time when the oil reserves within the country will be depleted. The emerging technologies are also defining the energy that engines will use in the near future as the society try to find alternative sources of energy which are environmental friendly. The decision to diversify economy will help in ensuring that the country is able to have a sustainable economy even when the oil and gas will cease to be rich sources of income for the country.

Works Cited

Abed I. United Arab Emirates: A New Perspective. London: Trident Press, 2001. Print.

Greenaway, David. The World Economy: Global Trade Policy 2008. Chichester, U.K: Wiley-Blackwell, 2009. Print.

Low, Linda. Abu Dhabi’s Vision 2030: An Ongoing Journey of Economic Development. Singapore: World Scientific, 2012. Print.

Ramady, M A. The Gcc Economies: Stepping Up to Future Challenges. New York: Springer, 2012. Print.

Ramcharan, Rodney. How Big Are the Benefits of Economic Diversification?: Evidence from Earthquakes. Washington, D.C: International Monetary Fund, 2005. Print

Srour, Gabriel. Economic Integration, Sectoral Diversification, and Exchange Rate Policy in a Developing Economy. Washington, D.C.: International Monetary Fund, 2004. Print.

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