Economy of Abu Dhabi - Research Paper Example

?Economy of Abu Dhabi INTRODUCTION The of Abu Dhabi is the federal capital of the United Arab Emirates (UAE), a sovereign country of seven Emirates at the shore of the Arabian Gulf. Abu Dhabi is the biggest of the seven Emirates and the largest federal seat of the government. Abu Dhabi is both the name of the island city and the largest Emirate that surrounds it which occupies over 80% of the UAE territory .The city of Abu Dhabi is located at the junction and was first settled in the mid-eighteenth century as a hunting and pearling base. Abu Dhabi has become the significant trade partner of developed countries after the discovery of oil in the twentieth century following the formation of the UAE in 1971 (Radan, “The Story of Abu Dhabi”). In the vicinity of 1969, the region of Abu Dhabi was solely demarcated as an empty desert. However, within a span of around 10 years it went through a sea of change wherein a number of landmark architectures were built. Abu Dhabi uninhabitable desert accounts for nearly 10% of the world’s proven oil reserves. The economy of Abu Dhabi is kept on firming up and it will continue for years. Abu Dhabi has a population base of 921,000 till 2013 (Gimbel, “The Richest City In The World”). The overview of limited private rights of land is becoming the area of focus and the world looks towards Abu Dhabi as a safe investment area. Thus, a rapid explosive progress has risen dramatically. However, it is important that this growth is managed and coordinated in a substantial way. The Urban Construction Framework Plan i.e. “Plan Abu Dhabi 2030” presents a clear picture of the upcoming city as a socially, environmentally and economically maintainable community and as a progressively important national capital (Gimbel, “The Richest City In The World.”). THESIS STATEMENT The aim of the study is to explore the economy of one of the world’s richest cities i.e. Abu Dhabi. A critical differentiation of the island’s economy before oil discovery and after oil discovery would be made. The contribution of local investments such as Yas Island and Masdar City towards the development of the economy would be ascertained. The thesis of the study which will be established is ‘Abu Dhabi has successfully developed its economy rapidly in a very short period of time’. HISTORY AND ECONOMY BEFORE DISCOVERING OIL The source of the name of Abu Dhabi is ambiguous but according to ‘Assistant Under Secretory’ of cultural affairs the place Abu Dhabi had a number of dhibhaa (deer) and there was a man who used to chase it. Thus, the nick name was given as Abu Dhabi. The economy was uncertain and local rulers maintained their autonomy only with the British assistance. Before the discovery of oil, Abu Dhabi was a land of desert and there were resourceful nomadic Bedouin tribes who mainly depended on subsistence agriculture, roaming animal husbandry, along with extracting and trading of pearls, fishing and seafaring. At that time, the city can be identified to reveal the availability of several hundred palm huts, a few coral buildings and the ruler’s fort. The Bedouin tribe refers to the desert dwellers, who are considered as the building block of the UAE society. They lived in different places and used to travel between the ocean, the desert (to find camels as well as herds) and the oasis (where the water sources along with irrigation are available for farming). The Bedouin tribe was considered as resourceful and independent and their skills prevail today among the modern Emirates people (Zayed University, United Arab Emirates, “The Story of the U.A.E.”). The city Abu Dhabi mainly depended on fishing and pearl business prior to the discovery of oil. At that period of time, Abu Dhabi was a poor fishing village in the desert. During the 1930s, Abu Dhabi was far from the present state of being regarded as the world’s richest city. At that time, Persian Gulf was considered as the best place for the pearls. Pearl founders had to dive one and a half minute and at times 30 times a day to decorate the beauty and gorgeousness of neck and fingers of pearl loving women (Morton, “The Abu Dhabi Oil Discoveries”). ECONOMY AFTER DISCOVERING OIL Based on the above discussion, it can be apparently observed that in the earliest years of subsistence, Abu Dhabi was a land of desert and one of the least developed regions but after the discovery of oil everything has changed and it has achieved an income level equivalent to that of industrialized nations. The UAE did not just go through the progress stages rather its huge oil revenues have empowered the cities such as Abu Dhabi to reach a stage of high mass consumption (Davidson 10-150). The revenue coming from the oil has facilitated the city to avoid the prolonged and difficult process of saving and wealth accumulation. However, it is worth mentioning in the context that oil exploration did not lead to immediate wealth for the Emirates rulers. Although the companies were able to find large deposits for the oil but World War II delayed the development of whatever had been discovered and Oman was unable to export oil till 1967. Abu Dhabi has been gifted with abundant natural resources such as oil and gas. Owing to the fact, UAE focused on developing resource-centered industries as its development strategy. Establishing industries that utilize natural resources, results in windfall income. The period of 1973 to 1982 signified the era of high oil prices and that facilitated UAE to leverage a significant extent of economic development (Davidson, “Abu Dhabi New Economy: Oil, Investment and Domestic Development”). With the discovery of oil everything was going with the wind. Starting with the political stability that came in 1971, the huge oil revenues resulted in shaping of the modern social along with economic structure, high wages, enhancement in standard of living, improvement in health and education as well as eventually result in least possible political conflicts (Shihab, “Economic Development in the UAE”) LOCAL INVESTMENT: HOW INVESTMENT IN YAS ISLAND FACILITATED TO STRENGTHEN THE ECONOMY Source: (Yas Island, “Yas Beach”). Since 2004, the dynamic leaders of UAE have refrained from completely relying on oil export for economic development as its earlier leaders did. Therefore, they began to diversify the economy by maximizing its competitive advantage to capture the capable foreign partners. As a result, a plethora of new sectors have been introduced. This includes heavy industries, renewable energy sector, widespread real estate project and most importantly cultural tourism. Investment in Yas Island along with making it a cultural tourist place has resulted in establishing Abu Dhabi as a potent and vibrant new economy within a few years. It has provided a huge opportunity for employment and investment (Gerrity, "Despite Economic Headwinds, Abu Dhabi Continues to Promote Yas Island Destination”). The island contains Federation International Automobile (FIA) certified Formula One motor racing amenity, the most technologically advanced form of motor racing on the planet. Besides, it includes 700 berth-marina to the south, the world’s inaugural Ferrari branded theme park, largest water park in the Emirates, a Warner Bros theme park, golf courses, big and captivating retail malls, hotels, residential areas and many such things that enable to decorate the city along with encouraging domestic and foreign investment. It also aids to invite the tourists to come and visit the wonderful island (Yas Island, “Yas Beach”). LOCAL INVESTMENT: HOW INVESTMENT IN MASDAR CITY FACILITATED TO STRENGTHEN THE ECONOMY Source: (Mascarenhas, “Abu Dhabi’s Masdar City: How the UAE’s Investment in Renewable Energy Resulted in a City of The Future) Back in the year 2007, the Emirates which control about 8% of the oil supply in the world decided to build a most progressive sustainable city on the ground of the empty desert. The innovative city is just located outside Abu Dhabi known as Masdar (which means source in Arabic) city. The prime aim to take such a strategic initiative is to diversify the local economy and outspread the Emirates leadership in the energy sector. Despite being criticized by many western countries, it has become the reality. The key aim behind establishment of this city is to reduce the dependence on oil as the key source for developing the economy. The city in itself contains graduate level universities, laboratories, Massachusetts Institute of Technology (MIT), various tech companies such as Siemens. Moreover, in the year 2009, it was made the headquarters of International Renewable Energy Agency (IREA). Therefore, Masdar initiative has been increasingly seen inclined towards fulfilling the Abu Dhabi’s 2030 goal not just in terms of economy and urbanization but also through investing in renewable energy. With all these efforts, the city has proven itself as the global leader in the sector of the both renewable and non-renewable energy. In conclusion what strikes most in case of Masdar city is that the city is not about creating renewable energy and environment-friendly city rather it reflects the collection of everything and shows the picture of what a truly modern city should look like (Mascarenhas, “Abu Dhabi’s Masdar City: How The UAE’s Investment In Renewable Energy Resulted In A City Of The Future”). LOCAL INVESTMENT: HOSTING FIFA CLUB WORLD CUP IN 2009 AND 2010 Source: (FIFA, “Abu Dhabi”) The hosting of FIFA Club World Cup in 2009 and 2010 had been a key determinant towards inviting a host of tourists towards the shores of Abu Dhabi. Football is the most popular sport in the UAE today. The presence of many football clubs demonstrates the popularity. The Island gives a sight of Louvre museum, multi-experiential desert island, cultural art, and carbon-free environment that are acting as a long-term strategy to encourage the sports loving people to come to the Island. This in turn inspires the tourism on the island and enhances the UAE economy. Hosting this kind of events enables to boost the development of sports and make the UAE an excellent international destination for sports enthusiasts from all over the world (FIFA, “Abu Dhabi”). FOREIGN INVESTMENT: BUYING MANCHESTER CITY IN 2008 The deal of buying Manchester City got confirmed on September 2008 between the prime minister of Thailand and Abu Dhabi United Group (ADUG). The crux of such a landmark deal was to explore the stake in Manchester City Football Club in order to make it the biggest club in the Premier League in the United Kingdom (Kerr, Abu Dhabi Investors Buy Manchester City”). It is observed that the Island of Abu Dhabi not only attempts to depend on the oil export to boost the economy rather it is keen to develop ways for development and investment by promoting tourism and sports for the contemporary generation of young individuals. According to the wise leaders of Abu Dhabi, opening various kinds of sports provide healthy body and mind (Adamson, “Manchester City Agree Takeover Deal With Abu Dhabi Group.”). FOREIGN INVESTMENT IN ETISALAT Etisalat is the brand name of Emirates Telecommunication Corporation which was established in 1976. It is a UAE based telecommunication service provider and it offers telecommunication services, media related services, post-paid prepaid landline services, broadband and wireless internet services, ISDN calling cards, Wi-Fi and web housing services and other value added services with home devices and modems. The company also provides TV and mobile broadband facilities and consultancy amenities for business clients and individuals in UAE and internationally. Owing to the facts, it can be concluded that for the high tech cities such as Abu Dhabi, the Etisalat acts as a shelter. It provides most advanced technology applications to the UAE. It enables the city to run the business smoothly and quickly through a steadfast communication carrier along with rendering a technology based experience to the individuals (Bloomberg L.P., “Emirates Telecom Corporation (ETISALAT)”). FUTURE ECONOMIC PLANS Nuclear Plants. The civilian nuclear energy program was designed to fulfill the key motive of producing safe, dependable, environment-friendly and commercially viable nuclear power to enhance the economic and social growth. In August 2012, Emirates Nuclear Energy Corporation (ENEC) had been bestowed nuclear fuel supply contract. Its strategy is to ensure security, quality and speedy delivery of imported fuel in the atmosphere of UAE denoting the UAE’s peaceful nuclear program. The UAE energy need is growing 9% every year. Thus, without the development of reliable sources of energy, it creates a severe hurdle for the future growth of the nation. Subsequently, the ENEC has taken the challenge and promised to generate nearly a quarter of the nation’s energy needs by rendering priority to the safety for the nation and its employees (Emirates Nuclear Energy Corporation, “Powering the Future of UAE through Safe Clean and Efficient Nuclear Energy”). Education is considered to be the major factor behind the success of the UAE’s peaceful nuclear energy program. According to Mr. Vanderheyden, ENEC has become fourth most desirable employer in the UAE and by 2020 the aim is to reach 60% of power supply (Emirates Nuclear Energy Corporation, “NNIC Focussed On Safety, New Nuclear Programmes And Nuclear Education Programme”). The UAE recently decided to collaborate with developed countries such as Japan, the UK, France and five other countries to explore more opportunities in the sector of the nuclear energy (Issa, “Abu Dhabi Conference To Focus On Nuclear Project”). Additionally, in 2012, UAE decided to start the creation of its inaugural nuclear power plant in UAE after the approval of Federal Authority of Nuclear Regulation (FANR) and the Environ Agency Abu Dhabi (EAD). The nuclear energy program of UAE endeavors to develop a long-term relationship program with the western regions who were already being benefited from the nuclear energy program. Correspondingly, nuclear energy program boosts the economy of Abu Dhabi by creating a huge employment opportunity and facilitating in the development process along with rendering giving socially secure life and protecting the environment (Abu Dhabi Government, “UAE’s Civilian Nuclear Energy Programme”). Abu Dhabi Economic Vision 2030. Transformation is an important part of the economic development. Thus, the government of UAE published a long-term plan. Essentially, the main aim of that economic vision is to reduce the dependency on oil sector for economic development and encouraging knowledge based industries in future. The project ensures a significant increase in the UAE’s non-oil sectors’ contribution to the gross domestic product by the year 2030. The project signifies two key principles i.e. establishing a sustainable economy and ensuring stable social, economic and political development that create benefit for all. Few more areas on which the Economic Vision 2030 have focused include building an effective globally integrated environment, along with depicting flexible and controlled financial policy, enabling the finance market, improving the efficiency of labor market, creating an environment where inflation is manageable and developing a greatly skilled workforce (Reporter, AG, "AED330 Billion for Abu Dhabi 2030 Vision”). The Abu Dhabi Economic Vision 2030 can be attributed to the result of the combined effort of private sector and joint public-private sector entities. The next phase of this plan is to establish five year economic strategy and a 12-year action plan that create a strong basis of the Abu Dhabi Economic Vision 2030 and allow a regular valuation period to judge the progress and enable necessary adjustment to be made accordingly (Abu Dhabi Government, “The Abu Dhabi Economic Vision 2030”). CONCLUSION From the overall discussion, it can be affirmed that the city of Abu Dhabi is certainly gifted by natural resources such as oil. Over the course of past few decades since the period of 1970s, the economy of Abu Dhabi has progressed dramatically especially with the influence of revenues generated owing to the discovery of oil. However, in recent past, Abu Dhabi has gone beyond solely relying on oil for progressing its economy and has focused on diversified avenues such as tourism and development of a high-class city among others. The city empowers the tourism to attract foreign tourists along with encouraging domestic and foreign investment. Additionally, its investment in Masdar City and Yas Island shows that how economically, socially and technologically developed regions should look like in the planet. Moreover, Etisalat renders the technological solution to the Emirates and its reliability on nuclear plant facilitates the UAE to meet its energy needs. Furthermore, the Abu Dhabi Economic Vision 2030 is acting as a guide to strengthen the economy. Therefore, it can be justifiably stated that the economy of Abu Dhabi has certainly progressed rapidly in a very short period of time with strategic and diverse thinking. Works Cited Adamson, Mike. Manchester City Agree Takeover Deal With Abu Dhabi Group. 2008. Web. 21 Nov. 2013. “UAE’s Civilian Nuclear Energy Programme.” Abu Dhabi Government. 2013. Web. 21 Nov. 2013. “The Abu Dhabi Economic Vision 2030.” Abu Dhabi Government. 2013. Web. 21 Nov. 2013. “Emirates Telecom Corporation (ETISALAT).”Bloomberg L.P. 2013. Web. 21 Nov. 2013. Davidson, Christopher. Abu Dhabi New Economy: Oil, Investment and Domestic Development. 2013. Web. 21 Nov. 2013. Davidson, Christopher M. Abu Dhabi: Oil and Beyond. New York, NY: Columbia UP, 2009. Print. “Powering the Future of UAE through Safe Clean and Efficient Nuclear Energy.” Emirates Nuclear Energy Corporation. 2011. Web. 21 Nov. 2013. “NNIC Focussed On Safety, New Nuclear Programmes And Nuclear Education Programme”. Emirates Nuclear Energy Corporation. 2013. Web. 21 Nov. 2013. “Abu Dhabi.” FIFA. 2013. Web. 21 Nov. 2013. Gimbel, Barney. The Richest City in The World. 2007. Web. 21 Nov. 2013. Gerrity, Michael. "Despite Economic Headwinds, Abu Dhabi Continues to Promote Yas Island Destination." Web. 30 Sept. 2013. Issa, Wafa. Abu Dhabi Conference to Focus on Nuclear Project. 2013. Web. 21 Nov. 2013. Kerr, Simeon. "Abu Dhabi Investors Buy Manchester City." Web. 30 Sept. 2013. Morton, Michael. The Abu Dhabi Oil Discoveries. 2011. Web. 21 Nov. 2013. Mascarenhas, Hyacinth. Abu Dhabi’s Masdar City: How the UAE’s Investment in Renewable Energy Resulted in a City of The Future. 2013. Web. 21 Nov. 2013. Radan, Silvia. The Story of Abu Dhabi. Web. 29 Sept. 2013. Reporter, AG. "AED330 Billion for Abu Dhabi 2030 Vision." Web. 30 Sept. 2013 Shihab, Mohamed. Economic Development in the UAE. n.d. Web. 21 Nov. 2013. “Yas Beach.” Yas Island. 2012. Web. 21 Nov. 2013. “The Story of the U.A.E.” Zayed University, United Arab Emirates. n.d. Web. 21 Nov. 2013. Read More