Page 48 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.76, # 2, 2019, pp. 46-55

revenues were derived from oil sources” (Grant, Golawala, McKechnie, 2007:508).
Furthermore, it is one of the most diversified and developed economies in the world.
Even though oil exports have played an important role in wealth accumulation in the
UAE, non-oil exports have a vital role in economic diversification. Tourism,
logistics and transportation, food manufacturing, raw aluminium and gold exports,
real estate projects are key non-oil sectors which contribute to the overall well-being
and sustainability of the economy. The economy of the UAE is characterized with
its openness with a huge annual trade surplus (Shayah, 2015: 736). To understand
the factors of success in the development of the economy in the UAE, it is important
to analyze its economic development from a historical perspective and review the
development policies of its government which resulted in success.

The UAE became independent in 1971. When it gained its independence, the
country was suffering from underdevelopment and poverty. In 1968, the country had
just 180,000 inhabitants, and main economic engagement of its people was pearling
extraction, agriculture, fishing, and controlled foreign trading (Delgado, 2016: 17).
Before 1971, the Emirates was a part of the British Empire, and it “was known to the
World as the Trucial States” (Delgado, 2016: 23). However, the discovery of oil in
the 1950s permitted the UAE to invest the revenues from oil exports in the
development of the economy and infrastructure of poor emirates. It was an obvious
fact that without the discovery of oil, it would be very hard for the UAE to develop
other sectors of the economy. Oil and gas extraction played a crucial role in the
rapid development of the economy in the UAE.

Furthermore, Delgado (2016: 32) writes that the progressive development of the
economy of the UAE has been associated “with the boom in oil prices between 1973
and 1984” which create an opportunity for the government to increase public savings
thereby directing them to the development of infrastructure and diversification of the
economy. Furthermore, Delgado (2016: 32) mentions that the UAE did not have to
pass through the stages of economic development, but it leapt these stages.

In 2016, the UAE made 298.7 bn USD of the oil and non-oil exports (Societe
General, no date). The analysis of the components of these exports in 2016 shows
how the UAE successfully diversified its exports. The country received only 12% of
revenues from the export of oil and gas. The rest of income of the country is
provided with the export of gold products (5.5%), diamonds, (4.3%), jewellery
(4.0%), motor cars and other motor vehicles (4.3) and powered aircraft (3.1%)
(Societe General, no date). The emirates also receive its national revenues from the
export of cigars and cigarettes, unwrought aluminium.

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