Seven individual emirates founded the UAE in December 1971. Over the last 38 years, the UAE has developed into the second largest economy in the Arab world.
The U.A.E. has a population of approximately 9.5 million, out of which about 85 percent are expatriates. In 2015, the U.A.E. registered a real GDP growth rate of 3.9 percent, down from 4.6 percent in 2014
United Arab Emirates is currently the United States’ 28th largest goods trading partner with $24.3 billion in total (two-way) goods trade during 2017. Goods exports totaled $20.0 billion; goods imports totaled $4.3 billion. The U.S. goods trade surplus with United Arab Emirates was $15.8 billion in 2017.
According to the Department of Commerce, U.S. exports of Goods to United Arab Emirates supported an estimated 104 thousand jobs in 2015 (latest data available).
Despite possessing substantial petroleum reserves, the UAE has pursued free market, trade liberalizing policies to diversify its economy away from a dependence on fossil fuel. Rapid growth in the non-oil economy reduced oil's share of GDP from 60 percent in 1980 to 35.8 percent in nominal terms in 2007.
To diversify away from oil, the government is transitioning from an investment economy to a knowledge economy. To this end, it is focused on developing new industrial and commercial sectors, including aerospace, healthcare, education, and defense and tourism.
The UAE’s two largest cities, Abu Dhabi and Dubai, have emerged as regional centers for business, education, culture and tourism.
MISC INVESTMENT FACTS
U.S. foreign direct investment (FDI) in United Arab Emirates was $16.8 billion in 2017, a 23.7% increase from 2016.
U.S. direct investment in United Arab Emirates is led by mining, wholesale trade, and manufacturing.
United Arab Emirates's FDI in the United States (stock) was $4.8 billion in 2017, up 51.4% from 2016.
Sales of services in United Arab Emirates by majority U.S.-owned affiliates were $8.6 billion in 2015, while sales of services in the United States by majority United Arab Emirates-owned firms were $2.3 billion.
The top import categories from UAE to US in 2017 were: aluminum ($1.4 billion), mineral fuels ($754 million), precious metal and stone (diamonds) ($200 million), and iron and steel products ($159 million)
The top export categories from US to UAE in 2017 were: aircraft ($4.8 billion), electrical machinery ($2.7 billion), machinery ($2.3 billion), vehicles ($2.3 billion), and precious metal and stone (diamonds) ($1.8 billion).
The U.S. and UAE entered into a Trade and Investment Framework Agreement (TIFA) in 2004, which established a formal dialogue to promote increased trade and investment between the two countries.
There is currently no bilateral investment treaty between the United States and the UAE.
The U.S. Department of State negotiated and signed a Memorandum of Understanding creating an Economic Policy Dialogue (EPD) with the UAE Ministry of Foreign Affairs in 2012, to address a variety of topics, including but not limited to trade, investment, sector-specific cooperation, competitiveness, and entrepreneurship. A CEO Summit process for the EPD was established in 2013, bringing recommendations from the private sector directly into the EPD discussions. The most recent meeting of the EPD was in December 2014.
As indicated elsewhere in this report, the regulatory and legal framework in the UAE is generally more favorable for local investors than for foreign investors.
The Commercial Companies Law requires all companies to apply international accounting standards and practices, generally International Financial Reporting Standards (IFRS). The UAE has never had local generally accepted accounting principles.
Legislation is only published when it has been enacted into law and is not available for public comment beforehand, although the press will occasionally report details of high-profile legislation. Final bills are published in an official register, usually only in Arabic, although there are private companies that specialize in translating laws into English. Regulators are not required to publish proposed regulations before enactment, but they share them either publicly or with stakeholders on a case-by-case basis.
While the U.A.E. is mostly a zero tax country, the government has implemented 5 percent value added tax (VAT).
The United Arab Emirates (UAE) has the world’s sixth largest proven oil reserves and the fifth largest natural gas reserves, making the country a critical partner and responsible supplier in global energy markets. The UAE is the world’s third largest exporter of crude oil, though exports very little the United States. While a mainstay to the economy, oil exports actually account for only about one-third of economic activity, as a result of aggressive government policies designed to diversify the UAE economy.
The UAE is also pursuing groundbreaking renewable energy and energy efficiency programs. In 2005 the UAE ratified the Kyoto Protocol to the UN Convention on Climate Change, becoming one of the first major oil-producing countries to do so. Abu Dhabi has also established one of the world’s most comprehensive clean energy initiatives.
The Aviation sector makes a contribution of $80 billion to U.A.E.’s economy, approximately 15 percent of the country’s GDP. The sector employs over 250,000 direct hires and supports approximately 225,000 indirect jobs. Major U.A.E. carriers include Emirates Airline (since 1985), Etihad Airways (since 2004), Air Arabia (since 2003), and flydubai (since 2009). Emirates and Etihad are full service carriers (FSCs), while the other two are low-cost carriers (LCCs). Emirates Airline is Dubai-based while Etihad Airways is based in Abu Dhabi.
On the commercial aviation front, the country has seven international airports, including the new Dubai World Central (DWC) which when fully operational will be the largest airport in the world. Also, Abu Dhabi is expanding its airport with a state of the art Midfield Terminal which is due to open in July of 2019 and the overall airport capacity is then expected to reach 30 million passengers. In terms of fleets, Emirates Airlines is the largest operator of the super jumbo Airbus 380, and the Boeing 777. Etihad holds the largest order of the 787 Dream Liners.
U.A.E. airlines continue to lead in the region as demand for air transport keeps rising and the sector sees significant growth in terms of expansion and modernization. According to the International Air Transport Association (IATA), U.A.E. airports will see 6.3 percent passenger growth in 2017, despite sluggish global growth, Brexit, and other political instabilities. The region also reported the strongest annual traffic growth of any region globally for the fifth consecutive year in 2016, and the demand for air transport continues to grow significantly in 2017 despite recent electronics bans enforced by the U.S. and U.K. (now lifted). Finally, the U.A.E. currently commands 25 percent of the private jet business.
The strong growth in air freight volume (Abu Dhabi – 5.6 percent and Dubai 3.3 percent) are also indicative of the U.A.E.’s growing importance in global freight hub and logistics. The two major airports in Dubai and Abu Dhabi are continually investing in development to meet industry expectations.
The World Health Organization determined that a third of adults in the U.A.E. are obese, and one out of five people live with diabetes. As the incidences of lifestyle diseases increase, these populations, supported by relatively high levels of income, will demand greater quality of healthcare.
The U.A.E.’s health expenditure reached a value of AED 59.15 billion ($16 billion) in 2016. In 2017, according to Business Monitor International (BMI) health expenditures increased by percent, reaching AED 62.2 billion ($17 billion), it is forecast to rise to AED 78.1 billion ($21.3 billion) by 2021, which translates to a compound annual growth rate (CAGR) of 5.7 percent. Overall healthcare spending is expected to account for 4.6 percent of a country’s GDP by 2026 from 4.2 percent in 2016.
In June 2015, the U.A.E. government launched a new health insurance program in Dubai to support nationals not covered under any other government funded health insurance scheme. This scheme is expected to benefit 130,000 by offering healthcare at 23 private hospitals and more than 500 medical clinics in and around Dubai. The Dubai Health Authority (DHA) announced in June 2016, that all Dubai residents should be covered by health insurance that will be tied to the renewal and issuance of their U.A.E. residence visas.
The U.A.E. government wants to boost the number of medical tourists coming to the U.A.E. by establishing Dubai as a center of healthcare excellence in the region. The country has a robust transportation and logistics infrastructure and is geographically well positioned to be the center of a transportation network that links the economies of India and China to Europe and the United States. These factors also make the country an attractive location for establishing a regional distribution center for medical devices.
The UAE has focused on educating both men and women. In 1975, the rate of adult literacy was 54 percent among men and 31 percent among women. Today, literacy rates for both genders are close to 95 percent.
New initiatives are being launched at all educational levels. A key area of focus has been to transform K to 12 programs, to ensure that UAE students are fully prepared to attend universities around the world and compete in the global marketplace. In addition, some of the world’s best universities are creating programs in the UAE, attracting talented students in the Arab world and globally.
The United Arab Emirates is one of the world's fastest growing tourist and business destinations. Traditional Arab hospitality and comfortable winter temperatures are omplemented by sophisticated infrastructure and world-class amenities.
The UAE also has become a world-class venue for conferences, regional and international exhibitions and major global sports events such as the Dubai World Cup for horse-racing, the Abu Dhabi Formula One Grand Prix, the Dubai Desert Classic Golf Tournament, the FIFA Club World Cup, world class film festivals in Dubai as well as Abu Dhabi, and in conjunction with the White House, the Global Entrepreneurship Summit. The UAE has won the bid to host the 2020 World Expo (link is external).
The United Kingdom's largest online travel agent, expedia.co.uk, selected Abu Dhabi as one of the world's top 10 travel destinations in 2008. Dubai International Airport won the award for the Middle East's leading airport in the 2012 World Travel Awards.
There is much to do in the UAE beyond Dubai and Abu Dhabi. First settled during the Bronze Age, Sharjah is the cultural capital of the emirates. The Heritage Area of Sharjah City includes a Maritime Museum, an Islamic Museum and museums for traditional and contemporary Arabic art, among many others.
Ajman attracts international visitors with beautiful beaches, as does Fujairah which also offers snorkeling and diving and excursions to the Musandam Peninsula, renowned for the unspoiled nature of its sheer cliffs, rocky coves and coral reefs.
The United Arab Emirates (U.A.E.) ranks among the top 15 defense spenders in the world according to Business Monitor International (BMI). Defense expenditure as a proportion of GDP has remained comparatively high in recent years in response to rising Islamist extremism in the region, persistent tensions with Iran, and the U.A.E.’s participation in the Saudi-led coalition’s military efforts in Yemen. While the U.A.E. government has continued to procure high-priority defense articles and services, it has focused recent purchases on urgent operational requirements in support of Yemen operations, and has delayed procurement of other lower-priority defense items in 2016.
According to BMI and GlobalSecurity.org, the U.A.E.’s 2016 defense expenditures stood at approximately $23.4. GlobalSecurity reported that the U.A.E. registered a compounded annual growth rate (CAGR) of 4.5 percent during 2016, and projects the country’s defense expenditure will grow at a CAGR of 6.5 percent to value $31.8 billion by 2021. On a cumulative basis, the country is expected to invest $140.8 billion for defense purposes, of which $53.1 billion is earmarked for capital expenditure to fund defense procurements.