A time of change: Hydrocarbons revenues and long-term planning support development in a number of key areas

Over the past 40 years Abu Dhabi has grown into a major economic power in the Middle East. A series of ambitious long-term development policies have transformed the emirate, turning it into a regional economic, political and cultural heavyweight. As the capital of the UAE, the bustling city of Abu Dhabi (as opposed to the emirate with which it shares its name) has become a significant player in its own right. This rapid rise has been made possible primarily by the emirate’s vast oil reserves. Indeed, the hydrocarbons industry comprised 58% of Abu Dhabi’s GDP in 2012, according to figures from the Statistics Centre – Abu Dhabi (SCAD), and accounted for over 80% of public revenue the year before. The government has put these substantial economic resources to good use over the years, rolling out an ambitious diversification programme and investing heavily in a wide variety of social welfare initiatives, with a particular focus on health, education and other social services.

VISION: Under the Abu Dhabi Economic Vision 2030 strategy, the emirate is working to build a knowledge economy, with a focus on boosting activity in a handful of key non-hydrocarbons sectors, including tourism, manufacturing, logistics, health care, education, financial services and telecommunications. Largely as a result of these initiatives, over the past few decades Abu Dhabi has become a major destination for foreign investment and foreign businesses looking to set up shop in the Middle East. At the same time, the government has worked to preserve the emirate’s culture, history and traditions, which are considered to be an integral part of daily life (see analysis).

GEOGRAPHY: Abu Dhabi, the largest of the seven emirates that make up the UAE, covers around four-fifths of the country’s total land area. It shares borders with the emirates of Dubai and Sharjah to the north, Saudi Arabia to the south-west and Oman to the east. The emirate accounts for more than 700 km of the UAE’s 819-km Gulf coastline. Only around 30% of Abu Dhabi’s land area – which totals around 67,340 sq km – is currently populated, while the remaining 70% is mostly uninhabitable arid desert. The emirate is organised into three separate administrative areas: Abu Dhabi City, Al Ain and Al Gharbia, with the latter previously known as the Western Region.

Abu Dhabi City, the capital of UAE and the largest city in the emirate, is situated on an island around 250 metres off the coast, though large parts of the city reach onto the mainland and surrounding islands as well. The island is connected to the mainland and other nearby islands (including Al Reem Island and Saadiyat Island) by a number of bridges.

The inland Al Ain region covers an area of around 13,000 km centred on the city of Al Ain, which is located on the border with Oman, around 160 km east of Abu Dhabi City. The Al Ain region is home to Abu Dhabi’s most fertile land and, consequently, a substantial number of agricultural developments. The city of Al Ain is a popular sightseeing destination among Emirati and foreign tourists alike, on account of its unique desert atmosphere. In an effort to boost tourist arrivals, the government has worked to protect the city’s cultural heritage (see Al Ain chapter).

Meanwhile, the vast Al Gharbia region accounts for more than 80% of Abu Dhabi’s overall landmass but is home to less than 10% of the emirate’s total population. The area is covered by expansive tracts of arid land and deserts, and is largely uninhabitable. It is also home to a majority of the country’s hydrocarbons reserves, in addition to a number of agricultural areas (see Al Gharbia chapter).

CLIMATE: Like most of the Gulf, in the summer months (June through September) Abu Dhabi is hot and humid on the coast and hot and dry further inland. Temperatures in Al Ain – one of the hottest areas in the whole of the country – can reach up to 45-50°C at midday during the summer months, though this figure generally drops substantially at night. Temperatures are typically cooler from October through May, though the emirate usually has blue skies and sun year round.

GOVERNMENT: The UAE government in Abu Dhabi City, the federal seat, oversees a variety of key responsibilities for the country as a whole, including national security and foreign affairs, among others. The president of the UAE is customarily the ruler of Abu Dhabi, while the ruler of Dubai serves as the country’s prime minister and vice-president.

The current president is Sheikh Khalifa bin Zayed Al Nahyan, who took over the position in 2004 when his father, Sheikh Zayed bin Sultan Al Nahyan, the founder of the UAE, passed away. The current prime minister and vice-president of the UAE is Sheikh Mohammed bin Rashid Al Maktoum, who has held the position since 2006. He is also the ruler of Dubai.

The Supreme Council of Rulers, which is made up of the hereditary rulers of each of the seven emirates, is the primary national policymaking body in the UAE. Other major federal bodies include the Council of Ministers, or the cabinet; the Federal National Council, a partially elected 40-member organisation that serves in an advisory capacity to the Supreme Council; and the federal judiciary.

Outside of the areas listed above, each of the seven emirates maintains a substantial amount of economic and political autonomy. Abu Dhabi, which boasts the great majority of the UAE’s hydrocarbons reserves, has used this autonomy to invest heavily in a series of economic diversification programmes, in addition to social and cultural development initiatives.

DEMOGRAPHICS: Estimates from SCAD put the emirate’s total population at 2.12m in mid-2011, up from around 1.97m in mid-2010, 1.83m in 2009 and 1.69m in 2008. The majority lives in Abu Dhabi City, which had a population of 1.3m in mid-2011, while the Al Ain region had 584,800 residents and Al Gharbia was home to 225,700 people. As of mid-2011 Emiratis made up around 20.7% of the population, with expatriates (primarily foreign workers) accounting for the remaining 79.3%, according to SCAD figures. The number of foreign labourers residing in Abu Dhabi has skewed the emirate’s gender mix in recent years. As of mid-2011 men accounted for around 71% of the population, while women made up the remaining 29%.

Like most other countries in the Middle East, in recent years the UAE’s youth population has grown substantially. As of mid-2011, according to SCAD, more than 50% of Abu Dhabi’s total population was below the age of 29, while more than 78% was below 40 and a full 92% was below the age of 50.

LANGUAGE: While Arabic is the official language of the UAE, a wide variety of other languages are also spoken in the country, including English, Urdu, Hindi, Chinese and various European languages. English is in wide use at all levels of business and government.

RELIGION: Islam, the official religion of the UAE, has a far-reaching impact on daily life, business and social interactions in Abu Dhabi. The country’s legal system, for example, is based on a combination of sharia precepts and guidelines along with international legal standards. Islam informs other areas of life as well, including public behaviour, the calendar, marriage relations and cultural pursuits such as music, art and literature. The Sunni tradition is the dominant form of Islam in the UAE and is practised by most Emiratis. However, Abu Dhabi City’s cosmopolitan population includes adherents to a wide variety of other religions as well, such as Christianity and Hinduism, among others. Indeed, the constitution of the UAE, which has been in effect since the country’s founding in 1971, guarantees freedom of religion in accordance with established traditions and customs.

ECONOMY & EMPLOYMENT: The thriving local hydrocarbons industry plays a central role in Abu Dhabi’s economy. As of the end of 2011 the UAE was home to nearly 6% of the world’s proven oil reserves, according to BP’s 2012 “Statistical Review of World Energy”, and of these Abu Dhabi holds around 95%.

Other important contributors to economic growth include construction, real estate, financial services and, increasingly, tourism. Abu Dhabi accounts for around 60% of the UAE’s economy.

According to preliminary figures from SCAD, the emirate’s GDP jumped by nearly 30% in nominal terms over the course of 2011, topping out at Dh806bn ($219.39bn) at the end of the year. This expansion was due primarily to rising oil prices and increased hydrocarbons production. In 2011, according to SCAD, oil and gas contributed around 58.5% of Abu Dhabi’s GDP. Under Economic Vision 2030, the emirate’s long-term development plan, it is working to bring this number down to 36% by 2030.

As of mid-2011, the most recent year for which SCAD has released statistics, Emiratis made up just over 9% of the national workforce, and of those working around 60% are employed in public sector positions, including a substantial number in defence and public administration. An estimated 11.8% of nationals were unemployed as of mid-2011, according to SCAD. In an effort to reduce unemployment among nationals, the government has invested heavily in training and education in recent years.

Countries: United Arab Emirates
Topics: Getting Started
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