Diversification boosts GDP - World Bank

Rapid diversification to non-oil sectors by the UAE has helped the country achieve significant growth in its per capita GDP growth, according to a World Bank report on MENA region released yesterday.

Per capita GDP in the UAE doubled to about $26,000 in 2001 in purchasing power parity (PPP) terms, since 1989 ($13,000). Real GDP growth averaged some 7 per cent a year in the 1990s. With population growth falling to about 3 per cent, per capita growth was about 4 per cent a year.

Much of this growth was led by rapid diversification to the non-oil sectors - first to energy-intensive petrochemicals, fertilisers, cement, and aluminum, and more recently to tourism, entrepot (re-export) trade, and manufacturing.

Growing by 9 per cent a year in the 1990s, these non-oil sectors accounted for 70 per cent of GDP and 43 per cent of exports in 2000. Growth of employment in non-oil sectors has averaged about 8 per cent a year, and private fixed investment grew at about 11 per cent a year in the 1990s.

"The leaders of the emirates have all been deeply committed to trade and openness as engines of development, each reliant on their comparative advantages – Abu Dhabi in energy-based industries, Dubai in commercial, telecommunications, tourism, and financial services, Sharjah in textiles and light manufacturing; and the northern emirates in agriculture, quarrying, cement, and shipping," the report said .

According to the report, expatriate workers account for 90 per cent of the labour force (mostly from the Indian subcontinent, the Middle East, and the Philippines), and free trade zones permitting 100 per cent foreign ownership of companies were established to capture the strategic advantages of location.

Dubai's Jebel Ali free trade zone is the largest, and the 12 free zones increased their share of total non-oil exports from about 22 per cent in 1999 to 57 per cent in 2000. With 3,000 companies operating, trade has touched $8 billion, and $1.4 billion in net exports, the report noted.

The UAE's trade-related services and infrastructure compete aggressively, with the best internationally benchmarked standards in ports, airports, customs, shipping, telecommunications, power, water, roads, banking, finance, and stock markets.

They are among the top 20 economies in Internet usage and the most wired in MENA.

About 29 per cent of the population use the Internet compared with 16 per cent in Bahrain, 8 per cent in Kuwait, 3 per cent in Saudi Arabia and Oman, and 1 per cent in Morocco and Egypt.