UAE Expects More Economic Growth through Diversification Policies

United Arab Emirates Minister of Economy Sultan Al Mansouri says officials plan to diversify the economy to minimize the damage from low oil prices. Energy commodities are playing less of an important role in the UAE economy.

United Arab Emirates Minister of Economy Sultan Al Mansouri says officials plan to diversify the economy to minimize the damage from low oil prices. Energy commodities are playing less of an important role in the UAE economy.

In the next few years, UAE officials hope to reduce energy exports to less than 10 percent of the nation’s GDP, planning to invest more in science and technology over the long-term. Under the banner of the UAE Vision 2021, leaders hope to undertake a massive transformation of the economy. The goal is surprising because oil once accounted for 90 percent of the country’s GDP in 1970, but non-oil currently makes up 69 percent of the economy. Moreover, the nation’s diversification strategy is working. The UAE recorded 25 percent growth in foreign investment, making up $13 billion.

UAE Tackles Food Security

The UAE’s imports expect to rise by $400 billion in the next 10 years, increasing from $100 billion in 2014. Further, officials hope to diversify its importation of food in the same as the economy. The UAE increasingly relies on food imports from abroad because much of the land cannot support a viable food system. However, authorities are looking to produce food on the lands of other countries for sustainable growth. The issue of food and water security is something that concerns not only the UAE, but also the Gulf States and the rest of the Middle East. The UAE has investment ties to such nations as Namibia, Algeria, Sudan and Egypt. UAE is also looking to South America and Eastern Europe for market expansion. One problem is that these target markets do not fare well when it comes to stability and regulation. Mansouri further stated the need for ethical laws throughout more nations to foster foreign investment growth and food security, and the UAE is leading by example.

The UAE aims to remove bureaucratic barriers that stand in the way of further foreign investment. For instance, officials have drafted the Law of Foreign Direct Investment, which allows 100-percent foreign ownership of certain sectors outside of designated restricted zones.

UAE Embarks on Sensible Strategy

Overall, diversification of food and energy will benefit the nation going forward. The oil industry will always be a thriving business at its core, but demand fluctuations and low price shocks place any nation that relies too heavily on energy commodities in peril. And since the Gulf States rely on oil more than any other nations on the planet, it is all the more important to invest in such things as infrastructure, job creation, food security, water desalination and foreign investment.