Abu Dhabi's New Economy: Oil, Investment and Domestic Development

Abstract

At the helm of the United Arab Emirates federation, Abu Dhabi powered into the twenty-first century on the back of ever-increasing oil revenues, well-established petrochemical industries, and massive oil-financed overseas investments. For the foreseeable future and despite worsening global conditions, these sectors and strategies will remain the central pillars of the emirate’s economy; Abu Dhabi will continue to be a major oil producer and to control the world’s greatest sovereign wealth funds. And since 2004, its dynamic new leadership has also begun to diversify the economy. By maximizing Abu Dhabi’s competitive advantages and reaching out to the most capable foreign partners, a plethora of new sectors have been launched. These include high-technology heavy industries, a pioneering renewable-energy sector, extensive real-estate projects, and up-market “cultural tourism.” Having been carefully selected and nurtured, these sectors will be responsible within a few years for a potent and vibrant new economy providing plentiful employment and domestic investment opportunities. Unlike the more urgent and seemingly problematic diversification that has taken place in Dubai and elsewhere in the Gulf, Abu Dhabi’s astutely managed economic development should allow the emirate to carve out a high-profile and sustainable niche, even during this time of global financial crisis.