Economic diversification is changing an economy’s income sources away from a single source and toward an increasing number of sectors and marketplaces. It has historically been used to promote positive economic growth and development. It gains increased significance in the context of climate change adaptation as a strategy for diversifying away from susceptible products, markets, and jobs and toward revenue sources that are low-emission and climate-resilient.
UAE Economic diversification:
The UAE seeks investment in scientific research, health care, food security, manufacturing, and innovative longstanding commitment to a business-friendly climate, with openness to foreigners in business and society in general, which maybe the cause for this. Retail (27 percent), transportation (15 percent), real estate (14 percent), manufacturing (13 percent), banking and finance (13 percent), and construction (13 percent) account for the majority of Dubai’s GDP (9 percent ).
The United Arab Emirates, the Arab world’s second-largest economy, is adopting several steps to increase FDI inflows.
The country changed its commercial company statute to attract more international capital, removing the requirement that onshore enterprises have an Emirati shareholder. The UAE economy expanded from 2.1 percent to 4.2 percent in 2022.
Dubai’s Economic diversification:
The emirate of Dubai has undergone fantastic growth and transformation of its economy over the last twenty years, starting with few natural resources, a tiny population, and poor infrastructure. Dubai’s economy has benefited from its openness to commerce, capital, and labor inflows, both skilled and unskilled. Since the announcement of Expo 2020, the emirate has created modern infrastructure and established a business-friendly environment and laws to promote the city as a regional commerce and finance hub. It has been highly successful in launching initiatives in aluminum (DUBAL, now part of Emirates Global Aluminium), transportation (Emirates Airlines and two huge airports), trade (Jebel Ali Port), and the Jebel Ali Free Zone. Other countries in the region have adopted the Dubai model through logistics and financial developments.
Dubai has taken the lead in its efforts to diversify both inside the UAE and within the GCC. Its long-standing commitment to a business-friendly climate, with openness to foreigners in business and society in general, maybe the cause for this. Retail (27 percent), transportation (15 percent), real estate (14 percent), manufacturing (13 percent), banking and finance (13 percent), and construction (13 percent) account for the majority of Dubai’s GDP (9 percent ). The ‘Dubai model’ of economic diversification and development includes the following fundamental features.
- Government-led development, fast decision-making, and fast-track development.
- A flexible labor force through importing expatriates.
- Bypassing industrialization and creating a service economy.
- Creating investment opportunities, market positioning via branding, and development in cooperation with international partners.
The role of the Asian economy in Dubai’s economic diversification:
Dubai is strategically placed at the crossroads of Europe, Africa, and Asia. Dubai is a potential destination to do business for China, a developing global leader in commerce and international business. Exploring Dubai-Sino economic links allows for more in-depth knowledge of both Dubai’s economic diversification and the global financial crisis impact. Dubai’s private sector is heavily involved in international trade, focusing on the service sector. Tourism, finance, and real estate are three subsectors of the service business. China’s involvement in these three sectors of Dubai’s economy highlights how the global financial crisis has impacted Dubai-Sino economic relations.
Dubai—epitomizes its emergence as an international trade and transit hub and a place of cultural symbiosis that hosts diverse nationalities from almost all corners of the globe. This plus point enhances the economic diversification in this city.