By the mid-�80s, however, the country was suffering a recession from the Iran-Iraq war, and oil revenues fell 40 percent. In 1991 the Bank of Credit and Commerce International (BCCI) collapsed and suspicion emerged. Twelve officials were convicted of fraud. (Russell 240)
In 1994 a moderate deficit caused the government to raise fees for services and utilities to supplement oil revenues. It also continued to expand infrastructure, giving contracts for electrical plants and military acquisitions. Further economic growth came from tourist hotels, shopping centers, and commercial buildings. Factories produced more than just oil in an attempt to become less dependent on oil in the future. Dubai even became the destination of Iraqi oil exports. Today agriculture also remains important with over 20,000 farms throughout the country. The government aims at self-sufficiency in food. (Russell 40). The country also houses the world�s largest man-made port, handling most non-oil trade, repairs, warehousing and shipping, as well as the busiest airport in the gulf. There are also tourist beaches and a huge world trade center.
Clearly, the country�s initiatives are continuously increasing with a goal of becoming a prominent player in the global economy. As of 2000, the gross domestic product was US$44 billion, with a GDP per capita of US$19,000. (Russell 236) The UAE has overcome dependence on oil and proceeded to develop strategically in the economic sphere.
Today the UAE is embracing the free market, focusing government resources on capital, and jumping into the world economy.
The most obvious indicator of UAE efforts toward diversification and a free market economy are the numerous industries that have begun to flourish. While, Saudi Arabia has focused largely on the oil industry, the UAE has used its large oil reserves to begin energy-related and indirectly related industries, and it has also developed non-oil industries as well. It�s economic activities include trade and transit trade, shipping, and agriculture as well as the increasingly important role of industries such as administration, financial, commercial and personal services, including government, banking, insurance, export-import, retailing, hotel and restaurant operation, and general tourism. (Held 401)
The country chose not to engage in large-scale oil refining, but rather to use oil to steadily expand energy-related industries. (Held 401) These industries have grown to include power plants, aluminum smelters, desalination establishments, water plants, factories, cement plants, steel fabrication plants, paint factories, and food processing establishments.
Perhaps the country�s greatest economic achievement has been the establishments of ports, including the world�s largest port. �Enterprising ruler Shaykh Rashid bin Said Al Maktum created major port, invited dozens of industrial companies, and opened free port area, now it�s a multi-billion dollar economic node (Held 403).� These ports have rocketed to success because of UAE free zones. Unlike Saudi Arabia�s reluctance to grant reliable and secure rights to investors, these zones each give comprehensive private rights of operation to hundreds of companies from numerous countries.
The UAE has also fully embraced retail industries. This comes in stark contrast to Saudi Arabia�s stance on retail. (Because of strict Islamic beliefs, Saudi Arabia has only recently begun warming up to the idea of a large retail industry.) The UAE, however, is even known for its �vacation shoppers� and �suqs.� Vacation shoppers come to the country on often all-inclusive trips to load up on bulk merchandise to bring home. Suqs are extraordinary shopping malls. Retail sales are not taxed, providing further incentive for shoppers. (Held 404)
In an effort to move away from a more local economy, the states of the UAE have also developed distinctive specializations. For example, Abu Dahbi is a oil, financial, industrial and administrative center, and Dubai is a recreational, trade, industrial, financial and shipping center. Meanwhile, Sharjah is a cultural, educational center that complements Dubai in transportation, manufacturing and business. Further, Fujayrah is a beach resort, while Al-Ayn largely focuses on agriculture. (Held 401)
Not only is the UAE rapidly diversifying its economy, but it is also fostering privatization. The Abu Dhabi Chamber of Commerce and Industry (ADCCI) is an obvious example of the country�s success. In about 30 years it has gone from 27 members to over 52,000. (UAE) The chamber�s growth stems from its numerous services and opportunities offered to private companies. �ADCCI provides a wide range of services, including setting up the Sheikh Khalifa Fund to provide technical and financial support for small and medium enterprises initiated by national youth; establishing a database to furnish businessmen and investors with up-to-date commercial information; organizing trade fairs in Abu Dhabi; sending delegations abroad to promote Abu Dhabi as a commercial center; as well as initiating training programs such as 'Passport for Work�, which trains nationals to join the private sector (UAE).� Likewise, Dubai has begun a program to help UAE nationals establish businesses at home �to encourage housewives, nationals with spare time, and those who have low-budget projects to establish businesses without facing the competitive risks of the open marketplace (UAE).�
The UAE has also been smarter that Saudi Arabia in its use of increased revenue from oil booms. After oil was discovered in the early 60s, the government began increasing capital and stimulating industry. For example, �after the mid-1960s the greatly increased capital and the greater demand for fresh foods stimulated development of the few potentially productive agricultural areas (Held 406).�
The government has also established policies requiring investment in local business ventures. �The UAE has made it a condition that foreign firms bidding for lucrative defense contracts should invest a portion of the value of the deals in joint venture projects with local partners. Under the offsets program, foreign defense firms are entitled to hold up to a 49 percent stake in the joint ventures with the rest being held by local private investors (UAE).�
Further the UAE has invested billions of dollars in capital to establish free zones to promote new commodities, trade, and exchange. �The US$3.3 billion Emirates Global Capital Corporation (EGCC), which was incorporated in April 1999, has been granted a 50-year concession by Saadiyat Free Zone Authority to establish a major new commodities market and free zone on Saadiyat Island near Abu Dhabi. The concession covers an area of 26 square kilometers. EGCC will develop a 50,000 square meter trading center with a stock exchange, futures exchange and clearing house and warehouses, the requisite commercial and residential real estate and physical infrastructure, including a port with storage facilities and a freight airport (UAE).�