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A global context to UAE’s growth story

Recent rankling reports record the impressive gains on multiple fronts

Image Credit: Ahmed Ramzan/Gulf News Archives
A view of Shaikh Zayed Road. The UAE is shifting towards an outstanding model that offers a rich experience on how to makethe most of oil revenues to achieve economic and social objectives for high living standards, education and health services.
Gulf News

Reports and studies on economic performance and governance are gaining in importance with the global business sector. In fact, these now rival those issued by international credit rating agencies, whose rankings are in the main limited to the risk and financial aspects, especially those related to credit, sovereign debts and liquidity.

Now, reports from the likes of the International Monetary Fund and the World Bank form a key reference for researchers and investors alike. In the early 1980s, nongovernment institutions emerged to evaluate economies in an unbiased manner. This coincided with significant developments in international economic relations, especially the rapid progress achieved by many emerging and developing countries, such as the UAE and other GCC countries.

As a result, these countries emerged competitors to the developed world on several economic and social development indices, led by the faster growth of their economies and the noticeable improvement in educational, health care and infrastructure services and that of the services sector.

This led to reducing the development gap between a number of developing countries, such as the UAE, and industrial nations. For instance, per capita income rose to a level that exceeds those in advanced countries, and also the average life expectancy has risen to rates recorded in the industrial countries.

Significant credibility

Due to the objectivity of the organisations undertaking the studies, such as the Global Economic Forum, the reports gained significant credibility, as they served as an incentive for countries to improve their economic and social conditions, given that many managed to bring about qualitative leaps in economic diversification and at the level of health, educational and housing services. Plus, there were marked gains in the area of utilisation of modern technology and infrastructure development.

The UAE sets a clear example of the nature of these changes to be in a stellar position on the ‘Human Development World Report’ issued by the United Nations Development Programme. In 2012, it was ranked first among Arab countries and occupied an advanced position globally, from among 187 countries.

Since economic liberty is one of the key philosophies embraced by the UAE since its formation, the UAE and Bahrain came first in ‘economic freedom’ in the ‘Arab World Report 2012’, by scoring 8.1 points against 7.9 points in 2011.

The economic freedom index is measured by Friedrich Naumann Foundation for Liberty, an international research foundation working for free markets and trade, a proper environment for businesses and laws that facilitate investor initiatives.

In relation to economic freedom, the ‘International Transparency Report’ ranks the UAE first among Arab countries and 27th globally, which would enhance trust in its investment environment and lead to more capital coming in. Transparency has become one of the most important requirements for the business sector at present.

The UAE became the only Arab country to be included in the ‘Global Economics driven by Innovation’ findings — the third and the most advanced stage of competitiveness in the ‘Global Competitiveness Report 2012-13’ released by the World Economic Forum.

It ranked the UAE first among Arab countries and 24th out of 144 countries globally, a gain of three positions from 2011. The report assesses the competitiveness of countries and touches on the necessary ways to improve economic policies to make countries more competitive in global markets. The report said the UAE economy is an innovation-driven economy.

Similarly, the UAE is ranked first among Arab countries, and 30th globally, in the ‘Competitive Industrial Performance Report 2012-13’.

The recent report issued by the Deloitte Foundation says the UAE will maintain its superiority among Arab countries until 2017, while on the global stage it will surpass Italy and Ireland thanks to industrial projects that boost its competitiveness. This index’s importance stems from giving voice to the opinions of 550 chief executives and industry leaders at leading manufacturing companies.

Fiscal policy efficiency

Furthermore, the UAE occupied first place globally on fiscal policy efficiency in the 2012 report issued by the International Institute for Administrative Development in Switzerland.

New York-based Edelman Foundation ranked the UAE first on government and economic confidence, gaining five positions in one year to take the lead. According to the Edelman Trust Barometer, the UAE is the first emerging country to come in first on an economic index, an impressive performance indeed.

Edelman affirmed that the strategies launched by the UAE Government have boosted confidence; the index also gauges efficiencies in government budgetary setting and resource allocation by focusing on the positive aspects of spending and reducing expenditure. The UAE is ranked seventh globally as the ‘least overspending country’. The index also involves good management of financial surpluses and utilising them in the service of development, an important indicator for a country that has substantial financial surpluses due to its oil revenues.

As a result of analysing data from the nine reports assessing world economies, a number of aspects can be concluded from them.

First, the UAE is shifting towards an outstanding economic model that offers a rich experience on how to make the most of oil revenues to achieve economic and social objectives for high living standards, education and health services. The UAE is an example to other oil-producing countries in particular and the world in general.

These reports also show that the desired economic progress and competing with developed countries on equal footing is possible if human, financial and natural resources are utilised properly in the service of development.

The UAE’s experience shows that utilisation of infrastructure projects and support to promising economic sectors, in manufacturing and services, work to attract foreign investment. Keeping away redtapism and providing necessary facilities are necessary to achieve results aimed at laying the foundation for growth, competitiveness and sustainable development.

It is worth noting that the UAE’s continuous updating of its legislative framework has contributed significantly to the progress referred to in the international reports. Without a flexible and up-to-date legislation system, there is no benefit to speak of. The laws allow the firming up of confidence within the business sector, ensure transparency and provide guarantees required to attract capital and a suitable environment for the private sector.

Since there are implicit guarantees to continue these approaches, the UAE is qualified to raise its status in international relations. It is ranked as a fast-growing emerging country and not as a developing state — this will enable the UAE to further economic and social progress and chalk up more advanced rankings.

— Dr Mohammad Al Asoomi is a UAE economic expert and specialist in economic and social development in the UAE and the GCC countries.