Question

The seven criteria for describing a nation’s economy. Using these seven criteria, develop a profile of the United Arab Emirates. Discuss what implications does this profile have for marketing opportunities in the country?

·            Type of economy. Is the nation an advanced industrial state, an emerging economy, a transition economy, or a developing nation?

·            Type of government. Is the nation ruled by a monarchy, a dictatorship, or a tyrant? Is there an autocratic, one-party system? Is the nation dominated by another state, or is it a democracy with a multiparty system? Is it an unstable or terrorist nation?

·            Trade and capital flows. Is the nation characterized by almost completely free trade or incomplete free trade, and is it part of a trading bloc? Is there a currency board, or are there exchange controls? Is there no trade, or does the government dominate trade possibilities?

·            The commanding heights (e.g., the transportation, communications, and energy sectors). Are these sectors state owned and operated? Is there a mix of state and private ownership? Are they all private, with or without controlled prices?

·            Services provided by the state and funded through taxes. Are pensions, health care, and education provided? Pensions and education but not health care? Do privatized systems dominate?

·            Institutions. Is the nation characterized by transparency, standards, the absence of corruption, and the presence of a free press and strong courts? Or is corruption a fact of life and the press dominated by the government? Are standards ignored and the court system compromised?

·            Markets. Does the nation have a free market system characterized by high-risk/high-reward entrepreneurial dynamism? Is it a free market that is dominated by monopolies, cartels, and concentrated industries? Is it a socialized market with cooperation among business, government, and labor (but with little entrepreneurial support)? Or is planning, including price and wage controls, controlled by the center.

Answer 1

Type of Economy : Emerging Economy

Type of Government : Absolute Monarchy

Trade and Capital Flows: Incomplete free trade and part of a trading block. There is a currency board but no exchange controls.

The commanding heights: State owned and operated

Services provided by the state and funded through taxes: Pensions, education and health care are provided.

Institutions: Corruption a fact of life and the press dominated by the government along with absence of strong courts.

Markets: Planning, including price and wage controls, controlled by the center.

The second largest economy in the Middle East which was dependent on the Oil based energy sector is seen lately, diverifying its economy to other sectors. This move is based on the continuously declining oil prices but still the major source of the economy is based on the energy sector. The constitutional monarchy that they have is taking adequate measures to popularise renewable energy which is the future and also creating free trade zones for attracting international investments. The benefit they have is the stability of the governments which helps them to go ahead with the development plans. Lack of nod from the governments in adopting a Public-Private Partnership model of development is a hindrance to the region's growth rate except in Dubai. The government owned institutions are often criticized for their lack of transparency which was indeed acknowledged by Transparency International, an NGO responsible for publishing The Corruption Perception Index annually.

The economy is of mixed free market type controlled by the government. Unlike the United States, citizens are given the benefit of centrally controlled Health care which is of atmost importance in the modern times of epidemics and pandemics. People are given pensions and education is a basic right as per the constitution. The region is exploring new markets by expanding its economy and providing more investment oppurtunities to the foreign investors both FDI and FPI. The creation of Dubai into a global financial hub can be explored towards other territories of the bloc. Overall, the monarchy is doing their part to facilitate the expansion of economy which is in a slowdown following global impacts and the realization of not able to capitalize on oil sector might be any eye opener.