The paper began with a discussion of the UAE economy, whereby the paper identifies the growth of economy that has been attributed to improvements in the property rights, monetary freedom, and labor freedom. …
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Understanding Economic Diversification in the UAE
This paper will explore the economy of UAE by discussing strength and weakness in a way that facilitates the understanding of the topic in the context of Abu Dhabi. Various issues related to labor, free zone and stock market are discussed in way that depicts their contribution to growth of non-oil sectors in Abu Dhabi. In this section, the paper seeks to identify ways through which labor, free zone and stock markets are supporting the diversification from the oil sector. Therefore, this gives an illustration of the ways in which Abu Dhabi is reducing the dependence on oil. The paper concludes with a summary and recommendations of the issues that will be explored. Understanding
The UAE economy The economy of United Arab Emirates has been ranked the thirty-fifth freest economy in the 2012 index with a freedom score of 6.9, and it has experienced a growth of 1.5 using last year as the base year. This growth has been attributed to improvements in the property rights, monetary freedom and labor freedom. Moreover, the economy is ranked fourth in a list of seventeen countries in Africa and Middle East due to its overall score that is higher than the averages on various regions in the world. Registration of the best twenty enhancements in 2012 index has made a substantial contribution to improving economic independence. The business environments and conditions boosting investments have contributed to restructuring of the economic systems; thereby facilitating the establishment of pulsating private sector. Furthermore, sustenance of momentum growth has been facilitated by the open trade regime with cost controls. Therefore, the UAE has been focusing on being a regional financial hub with a banking sector dealing with the financial problems moderately well. However, there are deficiencies in legal systems and investment framework, which are restraining the entire economic freedom of UAE. There are judicial systems that intimidate foreign investors by increasing their vulnerability to political influence. However, corruption is deteriorating compared to other economies in the region. Abu Dhabi makes significant contribution to the oil yields resulting in a principal role in political and economic decision-making (The government of Abu Dhabi, 2008). Of late, the focus of the government has shifted towards alternate and non-oil resources, a process termed as diversification. This paper purports to discuss the concept of economic diversification, growth of the oil and non-oil sectors over the last ten years, contribution of labor, free zone and stock market to the growth of the non-oil sector in the UAE. Concept of Economic Diversification The concept of economic diversification is associated with the process of risk reduction through division of the assets among various securities or forms of investment (Fridson & Alvarez, 2002). Therefore, diversification of income sources based on different and unrelated exposures to risk increases the chances of being compensated to the incidence of potential loss. Moreover, this is used in selection of a portfolio, fields of financial economics. Understanding this concept clarifies the reason behind government expenditure in UAE along with
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Conclusions : page 11 6. Works Cited : page 12 7. Appendix : page 13 Introduction Qatar, United Arab Emirates and Saudi Arabia are three of the rapidly growing economies in the Middle Eastern region. The recent financial crisis caused severe problems to some of the highly developed economies in the world; however, these three countries seem to be unaffected or less affected by the recent recession.
It is generally argued that the concept of globalization greatly contributes to effective and rapid circulation of ideas, languages, and cultural ideologies since nations have liberalized cross-border trade regulations with intent to enhance foreign investment and cross-border trade for international business expansion.
3M is present across the world in six diversified business segments. The businesses in which 3M operates are Health Care, Display and Graphics, Industrial and Transportation, Consumer and Office, Electro and Communications, as well as Safety, Security and Protection Services.
However, the said goods have to be legal goods. Free Trade Zones, abbreviated to FTZ are also known as Foreign-trade zones or exporting Processing zones in some quarters. These zones are usually situated in areas with several advantages to trade like good infrastructure, availability of labor, since they involve a lot of manual laborers and availability of quick and reliable transport.
Duties, tariffs, quotas, excises, subsidies, customs and other such concepts do not exist there and foreign investors have great deal of freedom to start up their business in these areas, often accompanied by tax breaks, less paperwork and few restrictions (Noack, 2007).
Free trade zones were originally created targeting foreign investors so as to promote foreign trade. They are areas where certain special laws do apply with respect to income repatriation, taxation, ownership, recruitment of labor, and value addition. Over the years, free trade zones have become the preferred areas by foreign investors since they offer a cost effective combination of factors of production (Dubai Media City, 2009).
According to Roos(2011) “Investment diversification is the equivalent of playing a lot of different numbers in roulette. Instead of investing all of your money in a single stock, you invest in a variety of stocks, bonds and other securities”. The investors in Middle East have different choices in diversification in investment practice.
However, due to old age that has incapacity him from ruling the daily operation are under crown prince Abdullah, one of his brothers.
In year 1971, six state came together to form United Arab emirate (EAE). The states are Abu dabi, Ajaman, Al Fujayrah,
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