Page 50 - Azerbaijan State University of Economics

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

government’s role is limited to formulating macroeconomic policies that reflect the
overall strategy of the free economy”. It means that the national government
maintains its minimal intervention in the economy while “demand and supply
determine by prices and investments in the economy” (Omaira, 2001: 2). As a part
of its economic diversification strategy of the UAE focuses on turning into one of
the most competitive economies of the world (Ahmed, 2015: 55) which an essential
component of integration to the world economy (Muradov, Hasanli and Hajiyev,
2019: 1170). “The UAE’s National Strategic Goals driven from the VISION
2021“To enable the UAE to become one of the most competitive countries in the
world. “Through knowledge economy supported by sustainable and diversified
economy” (Ahmed, 2015: 49).

Moreover, macroeconomic policies, including fiscal, monetary, trade and investment
have played an essential role in the development of the economy of the UAE
(Omaira, 2001: 2). The fiscal policy being performed in the UAE is based on
rationalizing public spending rather than spending funds for general development,
while monetary policy run is based on the strengthening and maintaining the
stability of national currency thereby stimulating private and foreign investment
(Omaira, 2001: 12-13). When it comes to trade policy, economic diversification
policy of the UAE is primarily based on reducing the reliance on oil export, and
therefore, the UAE’s government have eliminated all tariff-related barriers on the
export of non-oil products (Omaira, 2001: 14).

Liberalization of trade has always been a priority for the government of the UAE,
and due to this reason, the UAE has joined the World Trade Organization since 1996
(Omaira, 2001: 14). “The leading partners for the UAE nonoil exports were India,
Iran, Saudi Arabia, and China. Trade with India represented 21.5% of the nonoil
exports and 15.7% of the imports. China imports were second (11.7%), Japan was
third (9.8%), and the United States ranked fourth (8.3%)” (Grant, Golawala,
McKechnie, 2007:513). Moreover, intending to achieve economic diversification,
the government of the UAE encourages private sector investments by providing
favourable investment environment, incentives for private investors through a wide
range of investment incentives as well as through the establishment of free industrial
and trade zones (Omaira, 2001: 14). Privatization is an important component of the
economic policy of the UAE, as the state tries to minimize its participation in the
main development and real estate construction projects (Omaira, 2001: 15).

Alongside with this, through public funding, the government has made investments
in the tremendous development of local and national infrastructure to connect
different sectors of the economy (Nyarka, 2010: 7). Thanks to oil revenues, building
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