Page 47 - Azerbaijan State University of Economics

Bahruz Babayev: Studying the Case of the UAE in Economic Diversification and Non-Oil
Export Growth: Public Policy Lessons for Azerbaijan

the UAE could hugely invest in constructing the economy and building the
infrastructure.

However, the UEA had a strong reliance on oil exports before the 1980s (Elhiraika
and Hamed, 2002: 2). Due to declining and fluctuating oil prices that started in the
1980s, the UAE has started its efforts towards achieving economic diversification
and supporting non-oil exports since 1980s (Elhiraika and Hamed, 2002: 2). Since
then, the government has started to invest continuously in manufacturing and
development of other economic sectors to bolster economic diversification. As of
today, the UAE is one of the most diversified economies in the Arabian Peninsula
with advanced infrastructure and innovation-based knowledge economy. It is also
recognized a great regional centre of transportation, tourism, real estate,
entertainment, and shopping (Grant, Golawala, McKechnie, 2007: 507).

In 2020, the UAE diversified its revenues from non-oil exports which cover a
diverse range of sectors such as transportation, tourism, construction and
manufacturing of semi-processed products. Main non-oil exports of the country
include gold, jewellery, diamond, raw aluminium, and cigarettes. The emirates also
possess a robust re-export policy. The value of non-oil trade in the UAE was about
Dh1.63 trillion in 2018 (Gulf News, 2019). 25 per cent of non-oil exports are gold
which has been followed by aluminium and cigarettes (Gulf News, 2019). The
Emirates has also chosen a path toward innovation and knowledge-based economy
for 2021 and onwards.

Dubai which is a part of the UAE remains a great hub of foreign investment, world-
class real estate development projects as well as one of the premier destinations of
tourists. Davidson (2005: 5) mentions that the Emirates have suddenly become a
“development miracle” due to oil exports. Today, “strategic location, strong
financial reserves, large sovereign wealth fund, promising investor home economies,
consistent government spending, the progressive policy of economic diversification,
free zones and increased foreign direct investment contribute to the UAE’s robust
economy” (Government of UAE, no date). Furthermore, it is important to note that
oil exports have not been the only factor behind almost all aspects of advancement
and development in the region (Davidson, 2005: 5). Also, it was prudent policies,
the chosen development model as well as business ties with the Western countries
that played a significant role in the diversified economy in the UAE.

THE UAE’S CASE OF ECONOMIC SUCCESS
As mentioned earlier, the UAE is remaining the world’s “eighth biggest oil
producer” (Shayah, 2015: 735). “The UAE is an oil-rich nation; 80% of the nation's

47