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The economy of the United Arab Emirates faces different strengths and challenges just like other economies in the world. Comprising different emirates, the various economic sectors do their work jointly, thus boosting the economy of the UAE (Abed and Hellyer 121). The service industry is the most significant contributor to the economy of the UAE because it is composed of firms that provide unique services and intangible products that give huge returns. Economic diversification and the evident free trade zone in the UAE have fuelled the recovery of its financial system from its economic downfall that prevailed in the 1990s, thus causing a decline in economic growth and development. The essay details the main strengths and weaknesses of the key service industries.
Strengths can be categorized in terms of commercial, geographical, economic, infrastructural, business environment, and socio-cultural parameters (Gorgenlander 111). The strategic location of the UAE in the Middle East and its access to sea routes and ports boost the service industry because of the free movement of merchandise and the wide market that is available for its many services and products. The economic strengths experienced by the service industry of the UAE include the absence of trade barriers and foreign exchange controls. This scenario enhances trading activities in tourism, logistics, and banking sectors that rely on the absence of such measures.
Effectively planned transport, distribution facilities, and amenities in the UAE are an infrastructural strength of service industry of the UAE. Such efficient infrastructural elements facilitate fast movement and timely delivery of the required services, thus boosting economic growth. In addition, tourism hub, lack of import and export levy, and administrative support constitute business environmental strengths enjoyed by the UAE. This accessibility boosts the service industry that heavily relies on a welcoming business environment.
The availability of a fundamental business language, which is English, and the stable and tolerable societies, enhances trading in the service industry. These socio-cultural strengths rank the service industry of the UAE among the most efficient industries globally. Furthermore, the UAE thrives on commercial strengths such as the absence of corporate and personal taxation, free trade zones, and pro-business immigration policies. These elements encourage business structure and trading in key service sectors such as tourism and banking.
On the other hand, the UAE suffers several weaknesses. The fact that only its nationals enjoy the majority of the strong service industries is a weakness (Abed, Hellyer and Vine 76). This flaw results in foreign investors feeling discriminated against in the highly profitable industry. Since the currency of the UAE depends on the dollar, it suffers the weakness of inadequate control of the monetary policy. This situation affects its ability to control inflationary pressure that results from trading activities. In addition, the Emirates that compose the UAE have specific trade policies and conventions. This major weakness hinders business setup and establishment, consequently posing as a major drawback to economic growth and development. In the UAE, an investor requires a set of connections with entrepreneurs in order to increase production prospects. This requirement acts as a weakness in the service industry as the investor mainly possesses little knowledge of the UAE nationals.
It is evident that the strengths outweigh the weaknesses of the service industry in the UAE. The strengths generate significant improvement in job creation, wealth creation, and attraction of foreign investors in the region. This finding reveals the rapid economic growth and development in the service industry of UAE as well as other sectors.
Works Cited
Abed, Ibrahim, and Peter Hellyer. United Arab Emirates: A New Perspective. United Kingdom: Trident Press Ltd, 2001. Print.
Abed, Ibrahim, Peter Hellyer, and Peter Vine. United Arab Emirates Yearbook 2006. United Kingdom: Trident Press Ltd, 2006. Print.
Gorgenlander, Viktor. A strategic analysis of the construction industry in the United Arab Emirates: Opportunities and Threats in the construction business. Springer: Diplomica Verlag Publishers, 2011. Print.
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