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Has the UAE Escaped the Oil Curse?

Author

Listed:
  • Ilham Haouas
  • Raimundo Soto

    (Instituto de Economía. Pontificia Universidad Católica de Chile.)

Abstract

The UAE is blessed with vast deposits of oil and gas. Contrary to other oil-rich economies, the UAE seems to have escaped from the so-called "oil curse". We study how the UAE used resource rents to achieve economic development and provide higher welfare for the local population. We identify, nevertheless, symptoms of the resource curse in three areas: very low growth in labor productivity, government policies unable to counteract economic cycles induced by oil-price volatility, and massive overemployment and declining productivity in the public sector. Therefore, we conclude that while the UAE has not been immune to the oil curse, but it has managed to make the benefits outweigh the negative outcomes of oil exporting. We finally study the case of Dubai as an example of how to overcome the dependency on oil exports and diversify the economy by using a combination of market deregulation, support for foreign trade, and efficient provision of infrastructure and institutions for private sector participation.

Suggested Citation

  • Ilham Haouas & Raimundo Soto, 2012. "Has the UAE Escaped the Oil Curse?," Documentos de Trabajo 412, Instituto de Economia. Pontificia Universidad Católica de Chile..
    • Handle: RePEc:ioe:doctra:412
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    References listed on IDEAS

    as
    1. Roberto Rigobon, 2010. "Commodity Prices Pass-Through," Working Papers Central Bank of Chile 572, Central Bank of Chile.
    2. Serhan Cevik, 2019. "Policy coordination in fiscal federalism: drawing lessons from the Dubai debt crisis," International Journal of Emerging Markets, Emerald Group Publishing Limited, vol. 14(5), pages 899-915, April.
    3. Sambit Bhattacharyya & Paul Collier, 2014. "Public capital in resource rich economies: is there a curse?," Oxford Economic Papers, Oxford University Press, vol. 66(1), pages 1-24, January.
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    Cited by:

    1. Hoda Selim & Chahir Zaki, 2014. "The Institutional Curse of Natural Resources in the Arab World," Working Papers 890, Economic Research Forum, revised Dec 2014.
    2. Yasser Al-Saleh, 2018. "Crystallising the Dubai model of cluster-based development," Place Branding and Public Diplomacy, Palgrave Macmillan, vol. 14(4), pages 305-317, November.
    3. Andrew Sharpe & Bert Waslander, 2014. "The Impact of the Oil Boom on Canada's Labour Productivity Performance," CSLS Research Reports 2014-05, Centre for the Study of Living Standards.
    4. Sarah JOHNSEN, 2015. "Revisiting the concept of Social Enterprise in a Gulf Cooperation Council (GCC) context: a social constructionist view," CIRIEC Working Papers 1516, CIRIEC - Université de Liège.
    5. Arshad Hayat & Muhammad Tahir, 2021. "Natural Resources Volatility and Economic Growth: Evidence from the Resource-Rich Region," JRFM, MDPI, vol. 14(2), pages 1-17, February.
    6. Suzanna Elmassah & Eslam A. Hassanein, 2022. "Can the Resource Curse for Well-Being Be Morphed into a Blessing? Investigating the Moderating Role of Environmental Quality, Governance, and Human Capital," Sustainability, MDPI, vol. 14(22), pages 1-21, November.
    7. Ivailo Izvorski & Indermit S. Gill & Willem van Eeghen & Donato De Rosa & Ivailo Izvorski, 2014. "Diversified Development : Making the Most of Natural Resources in Eurasia," World Bank Publications - Books, The World Bank Group, number 17193, April.

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    Keywords

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    JEL classification:

    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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