About the U.A.E.’s Economy

Economy

The unprecedented economic transformation which has taken place in the UAE since the formation of the state has been largely funded by the judicious use of oil revenues. However, although oil and gas production remains the primary source of public revenue, the secret of the country's current economic success has been a determined government strategy of economic diversification, leading to the creation of new productive sectors. The immense wealth has been invested in capital improvements and social services in all of the seven Emirates. Petroleum production is centered in Abu Dhabi and Dubai.

Petroleum

Oil and gas production has been the mainstay of the economy in the UAE and will remain a major source of revenue long into the future, due to the vast hydrocarbon reserves at the country's disposal. Proven recoverable oil reserves are currently put at 98.2 billion barrels or 9.5 per cent of the global crude oil proven reserves. As for natural gas, the proven recoverable reserves are estimated currently at 5.8 billion cubic meters or 4 per cent of the world total. This means that the UAE possesses the third largest natural gas reserves in the region and the fourth largest in the world. At the current rate of utilization, and excluding any new discoveries, these reserves will last for over 150 years.

Agriculture

“I always had faith in God, a desire to change things and a determination to meet challenges. We became dutiful towards the country and people and with the help of God we managed to change the desert into green gardens and provide the people with a comfortable life.”

Sheikh Zayed Bin Sultan Al Nahyan

Lying in the heart of the world's arid zone, the UAE has little rainfall and one would expect it to be a barren place. Barren places, they certainly are, but the process of desertification has very largely been arrested in the country. It is now possible to see forests, fields of grass and wheat where once there were only desert sands and winds.

The UAE has a long tradition of agriculture in its oases where crops have been grown for 5000 years. Underground water was channeled to palm groves and small fields and the technique is still used today. Since the formation of the UAE in 1971, this small scale traditional farming has been complemented by investment that has seen thousands of hectares being cultivated. According to figures from the Ministry of Agriculture and Fisheries, agricultural production stands at over Dh 2 billion per year. An average crop season yields over 600,000 tons of crops such as tomatoes, cucumbers, aubergines, lettuce, cabbage and animal feed. Studies have shown that much of the country's soil can be cultivated provided there is water and as a result, there has been an extensive program to drill water wells. The government prepares land for local farmers at no cost along with providing seeds, machinery and advice on pest control. There is also government-funded research on different crops to see how they adapt to the local climate. In an attempt to conserve and use as much water as possible in as many ways as possible, the government has embarked on a three-part program designed to make the most advantageous use of this scarce resource.

There is more to agriculture than simply growing crops. One area that has seen dramatic growth is the poultry industry. The same is true for the dairy products industry. Herds of imported cattle have adapted to the climate and are now raised for the production of milk, cheese and yogurt for the local market.

Industry

The discovery of oil ushered the UAE into the industrial age. This process of industrialisation gathered momentum following the formation of the Federation. During the last two decades, with the Government's increasing emphasis on diversification and basic components such as capital and energy readily available, the manufacturing sector has made significant progress in the UAE.

Free zones have played an instrumental role in attracting manufacturing industries (see section on Business Environment) and today, hundreds of factories covering a wide range of manufacturing are distributed throughout the country. Cement, building materials, aluminium, chemical fertilizers and foodstuffs industries top the list, followed by garments, furniture, paper and carton, plastics, fiber glass and processed metals.

In 1999 the number of factories operating in the UAE reached 1,695 employing more than 145,000 people and with investments estimated at more than Dh 14 billion.

Sharjah has the largest number of firms followed by Dubai, Abu Dhabi and Ras al-Khaimah. Nearly 140 units were established in 1998 - roughly the pace at which new manufacturing units were formed in 1997 - and employment saw a 20 percent increase. The strongest growth was in chemicals (see section on Oil and Gas). The chemicals and non-metallic industries had the greatest number of establishments and employed the most people. Food and beverages -- in the consumer goods sector - were most successful at substituting imports. Industry in the Northern Emirates focused on small factories especially textiles, most of them in Ajman.

Dating back to the mid-1970s, the cement industry is one of the oldest manufacturing industries in the UAE. The first factory, Al Ittihad Cement Company of Ras Al-Khaimah, started its commercial production in 1975. This was followed by the construction of several other factories in Al Ain, Sharjah, Dubai, Fujairah, Ajman and Umm al-Qaiwain.