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The Economic Complexity of the UAE: Diversification into Goods and Services

Author

Listed:
  • Jorge Tapia

    (Center for International Development at Harvard University)

  • Sebastian Bustos

    (Center for International Development at Harvard University)

  • Nidhi Rao
  • Jesus Daboin Pacheco
  • Clement Brenot

    (Center for International Development at Harvard University)

  • Pankhuri Prasad

    (Center for International Development at Harvard University)

  • Douglas Barrios

    (Center for International Development at Harvard University)

  • Ricardo Hausmann

    (Harvard's Growth Lab)

Abstract

The UAE has achieved significant economic diversification over the past two decades, with non-oil goods exports growing 7.7% annually (2005-19) and services exports expanding by a factor of 3.5, driven primarily by transport, logistics, tourism, and stone/metals products. However, the current export matrix remains energy-intensive and exhibits relatively low economic complexity compared to aspirational peers, indicating limited accumulation of sophisticated productive know-how and suggesting constraints on future growth potential. This report applies economic complexity theory to identify a country-specific diversification roadmap, using density measures to assess feasibility based on the UAE’s existing capabilities and prioritizing opportunities with high complexity and growing global demand. Through this systematic sector identification process, we identify 63 products and 18 service industries organized into ten diversification themes: five in goods (food, metals, chemicals, plastics, and machinery) and five in services (ICT, financial services, business services, healthcare, and creative industries). Given the UAE’s relatively low Complexity Outlook Index, achieving further structural transformation will require active policies to accumulate productive capacities, execute well-targeted capability jumps, and strengthen state capacity to address market failures inherent in the self-discovery process.

Suggested Citation

  • Jorge Tapia & Sebastian Bustos & Nidhi Rao & Jesus Daboin Pacheco & Clement Brenot & Pankhuri Prasad & Douglas Barrios & Ricardo Hausmann, 2023. "The Economic Complexity of the UAE: Diversification into Goods and Services," Growth Lab Working Papers 254, Harvard's Growth Lab.
    • Handle: RePEc:glh:wpfacu:254
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    References listed on IDEAS

    as
    1. Mealy, Penny & Teytelboym, Alexander, 2022. "Economic complexity and the green economy," Research Policy, Elsevier, vol. 51(8).
    2. Hausmann, Ricardo & Klinger, Bailey, 2006. "Structural Transformation and Patterns of Comparative Advantage in the Product Space," Working Paper Series rwp06-041, Harvard University, John F. Kennedy School of Government.
    3. Ricardo Hausmann & Douglas Barrios & Daniela Muhaj & Sehar Noor & Carolina Ines Pan & Miguel Angel Santos & Jorge Tapia & Bruno Zuccolo, 2020. "Emerging Cities as Independent Engines of Growth: The Case of Buenos Aires," Growth Lab Working Papers 164, Harvard's Growth Lab.
    4. Ricardo Hausmann & Tim O'Brien & Miguel Angel Santos & Ana Grisanti & Jorge Tapia, 2019. "Jordan: The Elements of a Growth Strategy," Growth Lab Working Papers 131, Harvard's Growth Lab.
    5. Hausmann, Ricardo & Hidalgo, Cesar, 2014. "The Atlas of Economic Complexity: Mapping Paths to Prosperity," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262525429, December.
    Full references (including those not matched with items on IDEAS)

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