AP Econ
GDP of the UAE
In class we have been discussing traits, causes, and patterns related to a nation's Gross Domestic Product (GDP). During class we viewed the GDP per capita (GDP based on population) rankings of different countries, and I was surprised to see that the United Arab Emirates was not closer to the top due to its high output of oil. In addition to the booming city of Dubai the nations hotspot for both population and economic growth. Dubai is a growing tourist destination filled with real-estate,
aviation, and financial services. Lets not forget the recourse factor that should throw the UAE to the top of the GDP per capita chart. The nation not only possesses extensive access to oil, but its shared border with the Persian gulf supplies the nation with means of immense exporting capabilities.
The truth is due to the concentration on oil, which accounts for more than 85% of the nations exports. The United Arab Emirates possesses very few manufacturing companies which causes less exports and more imports. As a result the nation does not have much economic diversity. Out of the 9.27 million people living in the UAE just 72,000 residents control 42% of the nation's wealth. This means that the rich get richer and the poor just don't.
Because 72,000 people in the UAE are so wealthy they are able to afford lavish goods. For this reason much of the wealth acquired in the United Arab Emirates is spent on goods outside of the UAE as a result of a lack in supply of manufactured goods and a high demand for these products.
As a result of the UAE’s focus on oil as a source of revenue the government plans to lessen the nation's dependence on oil by the year 2030. They plan to do this by investing in luxury hotels to increase tourism, as well as allowing property rights to non-citizens to both add wealth to the construction, real-estate, and tourism market. They also plan to further involvement in international finance.
In short the UAE is a nation full of wealth, but do to its limited outputs and high imports the GDP per capita of the UAE remains lower than some may think at first glance.
Works Cited
“Economy of the United Arab Emirates.” Wikipedia, Wikimedia Foundation, 24 Jan. 2018, en.wikipedia.org/wiki/Economy_of_the_United_Arab_Emirates.
Reporter, Cleofe Maceda Senior Web. “Millionaires Control 42% of Wealth in UAE.” GulfNews, Gulfnews, 7 Sept. 2016, gulfnews.com/business/money/millionaires-control-42-of-wealth-in-uae-1.1892419.
“The United Arab Emirates.” Global Finance Magazine, www.gfmag.com/global-data/country-data/the-united-arab-emirates-gdp-country-report.
This also surprised me! We often think of countries with a large oil supply, such as the UAE, to be "rich" or at least to have a large GDP. It seems that the UAE is running a trade deficit, where their imports exceed their exports. Since their main export is oil, the UAE is undoubtedly a large consumer of energy. Through a bit of research, I found that they hope to continue to implement more eco-friendly energy sources as they diversify their economy. As you mentioned, one of the ways they plan to do this is by reducing reliance on oil and expanding the tourism industry. However, I would presume that increasing tourism would not help the wealth inequality problem you indicated. While the rich would increase their wealth, the poor would still find themselves far away from the growing economy.
ReplyDeleteI thought that it was crazy how out of the 9 million people in the country, 72,000 make up 42% of the nations wealth. A few weeks ago I remember reading in class about how there is a similar trend in the United States. I think that it's a huge part of the economy people forget about. Trying to increase tourism is an interesting way to try and bring in some more revenue to the country and I think that luxury hotels would just be the start if they wanted to really make an impact.
ReplyDeleteI wonder how much of the UAE's GDP is made up by their output of oil, and without it how far would their annual GDP drop? If there was a shortage of oil, how greatly would their economy be affected? It could potentially be dangerous for them to rely so heavily on the production of one resource/good. I thought you also made an interesting point that their wealth isn't distributed equally at all, so the GDP or seeming success of the top tier could be initially misleading.
ReplyDeleteI wonder how far the UAE's GDP would drop without their output of oil. If oil is a large output of the GDP for UAE, then their economy could be largely affected and this could potentially be economically dangerous for them.
ReplyDeleteI think that one of the more interesting parts of this post is how it makes you look at how different parts of the GDP equation are more important to different economies than others. In class we discussed how consumer spending was the overwhelming portion of our economy in America, however we see in the UAE that imports and exports are what drives the GDP. Also, I find it interesting that the country is turning to tourism first to diversify their GDP. While I believe this has the potential to be successful, I wonder if focusing on outputting more products as to not be so reliant on imports would not be more beneficial the long run.
ReplyDeleteI was also surprised that the UAE wasn't higher on the list, but now considering that they have to import almost everything, it makes sense as to why their GDP is lower. I know that Dubai is huge on tourism, but I never knew how big of an oil supplier they were, and that it's one of their only exports. I would think they they'd want to diversify their exports and expand them to reach a higher GDP to really further their country.
ReplyDeleteI was also surprised to learn that the UAE is not among the top nations in terms of GDP, as I assumed their combined revenue due to tourism and exports of oil would have resulted in a high GDP. It does make sense that their GDP is lower due to excessive imports; however, it’s interesting to see that the UAE’s imports actually hurt their GDP, whereas the US is a net importer (meaning that imports exceed exports), yet our GDP is still high. In addition, it will be interesting to see how the decrease in the output of oil and the increase in the construction of hotels (which is investment spending) will level out to either increase or decrease the GDP of the UAE.
ReplyDeleteThis is an interesting dilemma that I have not considered when thinking about GDP. Logically, it makes sense to assume that a country with a high amount of a valuable, scarce resource would be wealthy, but in reality it doesn't work that way; in some ways, economic diversity (which allows for economic autonomy) is more desirable to enable high production and limited imports.
ReplyDeleteThe way that you analyzed the GDP and its changes was very complex, specifically how you focused on different parts of their imports, as seen in the figure. I think it is very interesting that the country actually imports more than they export also. This obviously decreases their GDP because we always subtract imports in the equation. Also, because those 72,000 wealthy people are purchasing foreign products, those transactions do not impact the GDP of the UAE. We may have the sense that the UAE should have one of the higher GDP’s in the world, however, their massive foreign transactions and increasing imports directly subtracts or doesn’t count towards the GDP. I like the side that you took on this post because your details and statistics were interesting to your claim.
ReplyDeleteI was also shocked that the UAE didn't have one of the higher GDP's in the world. You would think that a country with a scarce resource with many people wanting it would have the country be more wealthy, but in this, it's not the case.
ReplyDeleteI agree that it is surprising to see that the UAE was not higher on the GDP list. At first glance it may seem like that is wrong, because there are many tourists and exports of oil, but like you mentioned it makes sense because they still import more than export. This means that when calculating the GDP we would subtract the imports leaving the exports to flow into the country's GDP. I thought this was a very interesting post, especially because a country's GDP might be more different than one thinks. Good job!
ReplyDeleteIt seems weird to me that only 72,000 people out of the 9 million make up 42% of the wealth in the country. Along with that it is also very interesting that they aren’t focusing on much else besides oil when they have the Persian gulf on one of their borders. I feel like if one of the 72,000 people started up a couple of manufacturing plants near the coast line then they could be making a lot of money fast since they would be able to export the goods very efficiently. I believe that this in turn would help close the gap between the rich and the poor because you would be giving the poor jobs in the plant to keep it running.
ReplyDeleteI also thought it was interesting that only 72,000 people make up nearly half the wealth in the country. I feel as though it may be a situation where those 72,000 people are extremely rich and can buy anything they could possibly want. However, it leaves the rest of the population (nearly 8.9 million people) probably not that well off, and actually pretty poor.
ReplyDeleteI agree, it is very surprising that their GDP per capita is not higher as usually when you hear about the UAE it is because some billionaire did something crazy. It is also very surprising that 72,000 people of the 9 million make up 42% of the countries wealth. Since they produce so much oil and have good advantages for trade you would think they would have a more spread out economy but from this post we find that the economy is not as spread out and that there is a small amount of people with the majority of the wealth.
ReplyDeleteI think it will be extremely interesting to see in the future what the United Arab Emirates decides to do as old becomes less relevant due to new energy technology being implemented and more and more countries pledging to wean themselves off of a dependency on oil as the primary source of energy. If the UAE is able to either shift into being more a of services based economy by engaging in activities like building luxury hotels, or increasing its investment in crafting an attractive tourist/service industry, I think it will be curious to see how much the GDP goes up in relation to how it was when natural resource extraction and exporting was its primary sector in its economy.
ReplyDeleteEven though the UAE is a small country, it has a large GDP per capita. But what is possibly more interesting is the GDP per capita in even SMALLER countries like Andorra or San Marino, as they themselves are landlocked, somewhat isolated, and no larger than a city but are still economically sustainable.
ReplyDeleteIts quiet impressive that the GDP from the UAE is so low if millions of dollars are cycling within the UAE weather it's imports or exports. knowing that many major business people and companies that are well known are situated there its hard to believe that the GDP is not higher.
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