4. Policy Implications of the UAE’s Economic Diversification Strategy: Prioritizing National Objectives

Since the 1980s, the UAE has pursued an economic diversification strategy to decrease its economy’s dependence on oil. While some emirates have diversified quicker than others, this diversification strategy has come at the cost of other important national objectives such as preserving the national identity and Emiratization. This chapter describes and analyzes the policy implications of the UAE’s economic diversification strategy and discusses trade-offs to pursuing economic diversification in its trade, manufacturing, finance, services, tourism and the defense industry sectors. The chapter concludes that success of the UAE economic diversification strategy relies on the government’s ability to incentivize Emiratis to leave the public sector and increase labor productivity in the private sector.