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Unformatted text preview: United Arab Emirates Country Analysis 4 / 2 / 2 0 1 1 FIN6626 International Finance I 1 M B A S 1 2 G r o u p 7 United Arab Emirates Country Analysis Executive Summary The United Arab Emirates (UAE), once seven independent states under British oversight, has emerged into a global economic powerhouse because of its abundant natural resources, successful financial investments, and extensive focus on real estate and tourism. Having the worlds sixth largest oil reserves and fifth largest natural gas reserves, the UAE is poised for year over year economic growth, which has allowed them to focus more heavily on economic diversification and political reform. As this desert country continues to grow, so does their reliance on energy, which has spurred a major governmental effort to identify renewable energy sources to offset consumption. Renewable energy initiatives that the UAE have pursued drove the investment recommendations made in this analysis. UAEs economy has seen extreme growth in recent years, as seen by above average GDP and eight figure year-over-year trade surpluses since 2003. This economic boom is more impressive when considering the countrys strong push to alleviate its reliance on oil exports and diversify into other industries. Currently, profits from oil exports represent roughly 33% of the economy. Volatile oil prices, which heavily correlate to UAE profitability, are becoming less important to overall financial growth. Actions like this help to mitigate risk for potential investors and should make the UAE more attractive in the foreign investment arena. Capital markets in the UAE are also modern and robust. They enjoy two stock exchanges, have implemented an extensive market oversight organization to protect the integrity of their markets, and have created several government-owned investment institutions to help foster investment diversification. The Emirates welcome new business, as they have established Free Trade Zones that offer many benefits to investors that set up operations within UAE borders. The UAE ranks number one among Arab countries in foreign investment and is considered a global business center for its constant pursuit of social, economic, and technological advancement. Political reform has been prevalent in the UAE throughout history. The first federal constitution was established in 1971 that brought these seven Trucial States together to operate as one entity. Although the UAE has experienced some growing pains in transferring authority from individual states to a federal governing body, the political stability is high. The UAE has recently rolled out a detailed, objective action plan called Vision 2021 to help them methodically reach their goal over having balanced power among state dictatorship and federal policy....
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This note was uploaded on 03/07/2012 for the course FIN 6626 taught by Professor Naranjo during the Spring '11 term at University of Florida.
- Spring '11
- International Finance