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the economy of the united arab emirates

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by

Christine Wang

on 1 October 2013

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Transcript of the economy of the united arab emirates

United Arab Emirates
Claudia Huang and Christine Wang
The UAE is a Gulf Arab state formerly ruled by Britain.
In 1971, seven shiekdoms declared independence from Britain and formed the United Arab Emirates.
Gross Domestic Product
In 2012, GDP in the UAE was $360.25 billion
In the 1950s, oil was discovered in the region, leading to significant growth and expansion of its economy
capital goods
consumer goods
Since then, the UAE has had a free market economy has grown quickly, though it has suffered due to the global financial crisis
Personal consumption expenditure: 57%
Gross investment: 25%
Government expenditures: 9%
Net exports: 9%
GDP: Expenditures Approach
RGDP
Price Level
SRAS
AD1
Q1
P1
AD2
P2
Q2
GDP by Sector
53.9%
industry
45.3% services
0.8%
agriculture
Crude oil, petroleum, natural gas,
energy, manufacturing, construction
tourism, financial services, banking
farming (dates) and fishing
Phillips Curve
inflation (%)
unemployment (%)
2008: (3.71%, 12,3%)
2009: (4.2%, 1.56%)
2010: (4.3%, 0.9%)
Exports: $252.6 billion
Primary Exports: Crude oil, natural gas, re=exports, dried fish, dates
Primary export partners: Japan, India, Iran, S. Korea, Thailand, SIngapore
Why trade?
UAE
India
Chemicals
Precious stones
4
8
1 PS = 2C
Chemicals
Precious stones
10
10
1 PS = 1C
1C = 1/2PS
Imports: $185.6 billion
Primary imports: machinery/transport equipment, chemicals, food
Primary import partners: India, US, China, Germany
World Market
Crude oil (gallons)
Price per gallon
UAE export supply
UAE import demand
US export supply
US import demand
Pw
Qw
Exports and Imports
Comparative Advantage
8
10
Future Outlook
Exchange Rate
The UAE and the World
Circular Flow Model
Households
(Consumers)
Resource Market
Abu Dhabi National Oil Company (Producers)
Product Market
Resources: labor (oil driller), land (oil rich zone), capital (drilling/transport equipment, entrepreneurial ability
Factors of production
(resources)
Products: petroleum, crude oil, natural gas, petrochemicals
Products
Money income
Costs
Revenue
Consumption expenditures
30th highest GDP in the world,
3rd highest GDP in Middle East-North Africa region
high standard of living
Since 1997, the UAE has used a fixed exchange rate of 1 UAE dirham = 0.272294 US dollars
Fixed Exchange Rate
Dirham price of dollar
Quantity of dollars
S
D1
D2
balance-of-payments deficit
Formerly reliant on the export of natural resources, the UAE is now trying to diversify its economy by expanding industries.
This will likely decrease unemployment but increase inflation due to their inverse relationship
The UAE's economy is expected to continue its growth, though at a slower rate due to the difficult world economic situation
Dollar Price of Dirhams
Member of the WTO, OPEC, and GCC
Free-trade zone in Dubai - attract foreign investors
Low tariffs - have not risen above 4.9% in 2011
Dollar price per gallon
Crude Oil (gallons)
Sd
Dd
UAE Domestic Market
$0.75
100
Dollar price per gallon
Crude Oil (gallons)
Sd
Dd
U.S. Domestic Market
100
$1.25
$1.00
50
Full transcript