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An Evaluation of Tourism Development As Diversification Strategy in the United Arab Emirates

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An Evaluation of Tourism Development As Diversification Strategy in the United Arab Emirates An Evaluation of Tourism Development as Diversification Strategy in the United Arab Emirates Mubarak Hamad Marzouq Al Ameri A thesis submitted in partial fulfilment of the requirements of Nottingham Trent University for the degree of PhD December 2013 ACKNOWLEDGEMENTS I would like to express my thanks and gratitude to my supervisors, Professor David Smith and Professor Paul Whysall, for their guidance and support throughout all the stages of doing this research. My thank also go to my family for their support and understanding. My thanks extended to my country and my workplace for giving me the opportunity to conduct this research and to help me to fulfill my dream to do it. 2 ABSTRACT The United Arab Emirates (UAE) has been transformed from a land of deserts into a land of opportunities within a span of four decades. The robust economic growth of the UAE is evident from the booming economic sectors such as real estate and construction, tourism and hospitality, telecommunications, shipping and logistics, retail and finance. This growth epitomises the success of an innovative state-led capitalist growth model, under an able leadership. The main objective of this study is to evaluate government policies towards diversification of the UAE economy away from its heavy reliance on oil. The research examines the UAE Government’s policies towards the tourism sector, especially the role of tourism in the diversification of its economy. For this purpose, the approach and methodology employed in this paper is qualitative in nature. A thorough review of the literature has been conducted to understand the historical perspective of resource abundance and oil curse theories and rentiers, city state and economic diversification concepts. Qualitative research methodology in the form of a case study was employed to obtain an in-depth analysis and evaluation of the performance and development of the tourism sector. For this purpose, the larger Emirates of Dubai, Abu Dhabi and Sharjah were selected. The results revealed that the exceptional growth of the UAE since the 1970’s has been triggered by the exploration of oil. The early realization of the resource curse by the government of UAE has resulted in various efforts being made to reduce the dependence and reliance on the oil sector for economic growth. The UAE has employed liberal and market oriented policies which laid a strong foundation for its successful diversification of the economy away from oil. The government has focused on non-oil sectors, particularly tourism, to ensure that the UAE becomes a regional hub for tourism and global investment. The UAE has invested billions of dollars into various non-oil sectors and has ensured that the oil sector’s contribution to the country’s GDP is reduced. The government has created a competitive as well as a coordinated atmosphere to ensure that all the seven emirates work towards the common goal of diversification and the development of the UAE economy as a whole. 3 The vision of the government in making the UAE a preferred destination for tourism is gaining momentum, which ensures a significant increase in the contribution of the tourism sector to the National GDP. However, among the seven emirates, only Dubai, Abu Dhabi and Sharjah have taken serious policy initiatives to ensure the development of the tourism sector to ensure the increase in competitiveness and economic growth. Further thrust is required to increase the investment and development of non-oil sectors by all the emirates to ensure sustained development of the economy in the long run. There is more emphasis to focus on non-oil sectors, especially tourism, as the continued dependency on the highly volatile oil sector for wealth will affect the growth and stability of the economy of the UAE in the long run. 4 Table of Contents ACKNOWLEDGEMENTS ................................................................................................................. 2 ABSTRACT .................................................................................................................................... 3 1 INTRODUCTION ............................................................................................................. 13 1.1 PURPOSE OF THE STUDY ....................................................................................................... 13 1.2 INTRODUCTION TO THE SUBJECT AND BACKGROUND .......................................................... 13 1.3 RESEARCH AIMS AND QUESTIONS. ...................................................................................... 15 1.3.1 Research Aims ................................................................................................................. 15 1.3.2 Research Questions ......................................................................................................... 15 1.4 METHODOLOGY ................................................................................................................... 15 1.5 RESEARCH CONTEXT ............................................................................................................ 17 1.6 INDICATION OF THE CONTRIBUTION ..................................................................................... 18 1.7 THESIS STRUCTURE .............................................................................................................. 18 2 UNITED ARAB EMIRATES: COUNTRY PROFILE ...................................................... 20 2.1 BACKGROUND ON THE MIDDLE EAST .................................................................................. 20 2.1.1 History and Development ................................................................................................ 20 2.1.2 Topography and Geography ............................................................................................ 21 2.1.3 Culture, Religion and Language...................................................................................... 22 2.1.4 Demographics .................................................................................................................. 22 2.1.5 Politics ............................................................................................................................. 23 2.1.6 Arabian Peninsula ........................................................................................................... 23 2.2 ECONOMY OF THE MIDDLE EAST ......................................................................................... 24 2.2.1 Aggregate Income and Sources of Income ...................................................................... 24 2.2.2 UAE Main Industries or Sectors ...................................................................................... 24 2.2.3 Policy Reforms ................................................................................................................. 27 2.3 BACKGROUND ON THE UNITED ARAB EMIRATES ................................................................ 27 2.3.1 Composition ..................................................................................................................... 27 2.3.2 History ............................................................................................................................. 27 2.3.3 Structure of UAE ............................................................................................................. 29 2.3.4 Topography and Geography ............................................................................................ 31 2.3.5 Demographics .................................................................................................................. 32 2.4 UNITED ARAB EMIRATES ECONOMY ................................................................................... 33 5 2.4.1 Economic Development ................................................................................................... 33 2.4.2 Policy Reforms (Diversification Plan) ............................................................................. 34 2.4.3 Primary Economic Sectors .............................................................................................. 37 2.5 EXPORTING IN THE UNITED ARAB EMIRATES ...................................................................... 40 2.5.1 Development of Exporting in the UAE ............................................................................ 40 2.5.2 Trade Performance of the UAE ....................................................................................... 41 2.5.3 Export Sub-Sectors in the UAE........................................................................................ 42 2.5.4 Trading (Export and Import) Partners of the UAE ......................................................... 44 2.5.5 Infrastructures Supporting Trade (Import and Export) in the UAE ................................ 45 2.6 CONCLUSION ........................................................................................................................ 51 3 LITERATURE REVIEW ................................................................................................. 52 3.1 INTRODUCTION ..................................................................................................................... 52 3.2 CITY-STATE CONCEPT .......................................................................................................... 55 3.2.1 Hinterland and development...........................................................................................
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