How is the middle east planning to maintain its economy with decline in oil prices?
The middle east is represented by the following countries:
Bahrain, Egypt, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, Sudan, Syria, Turkey, United Arab Emirates, and Yemen.
These countries are blessed with oil reserves, which bring in wealth and movement of labor.
The unsuccessful ceasefire in Syria, the continuing war in the Republic of Yemen, the fight in Iraq against the Islamic State cluster, and also the political crisis in Libya were a part of a continuing cycle of conflict within the region that have led to mass displacement, loss of life, and destruction of infrastructure. Cross-border spillovers in the form of discontinuous trade, business pressures from disbursement demands associated with refugees and security, and loss of revenues from business have caused injury to the region and had international ripple effects.
In 2015, 41.3% of the global oil exports were made by the middle eastern countries. Although, some of the advanced economies in this region, like Israel are not dependent on the oil production at all. Its major area of exports include pharmaceuticals, diamonds, and technology. So Israel is free from the influence of oil prices.
This nation is the Gulf’s first “post-oil” economy. It majorly invested in the banking and tourism sectors. It also decided to get into the manufacturing sector by the production of aluminium and has signed trade agreements with the US.
The Egyptian economy includes tourism, foreign exchange, and agriculture. It exports food and cotton for textile industries, which is only possible due to the Nile river basin.
It has a potential to become the world’s largest economy and is unique to the middle east as its economy includes over 40 industries like mining, steel iron, copper, banking and finance, agriculture, telecommunications, automotive etc.
57% of the GDP is constituted by the non-oil industry. The government has invested in sovereign wealth funds (in real and financial assets).
50% of the GDP is constituted by the non-oil industry. Other industries include cement, copper, steel, chemicals and optic fiber. It is shifting its economy to heavy manufacturing sectors and re-exporting.
The government has not taken many steps to diversify the economy as the population is less (<1 million). It currently is crowned as the country with the highest GDP per capita. It is also known to have developed the largest per capita sovereign wealth fund.
It holds about 20% of the oil reserves of the world. The government has heavily invested in infrastructure and education sector as around 40% of its population is under the age of 15. As a part of the diversification of the economy, it has announced to set up ‘six economic cities’.
The UNITED ARAB EMIRATES
It has been exceptionally successful in diversifying its economy as a whopping 71% of the GDP comes from the non-oil sectors. Oil accounts for only 2% of Dubai’s GDP. 0% tax and 100% ownership have been successful in attracting many foreign direct investments. A major source of revenue comes from the tourism sector.
The country has leaped in fulfilling necessities to sustaining economic process in the future, whereas securing development gains, and guaranteeing high standards of welfare to the Emirati individuals for future generations.The UAE is one among all the primary oil-producing countries within the world that centered on diversifying its economy far away from this sector and looked to expand national investments in a range of alternative sectors, together with infrastructure, trade, tourism, money and banking services, renewable energy as well because the producing and exactness industries.
The UAE was able to increase production in these sectors and to have confidence these sectors to get financial gain, stimulate economic process and generate new jobs. The investment within the industrial sector is predicted to double within the next 5 years, with infrastructure projects development continuing at each the federal and country levels. The UAE is developing variety of projects in integrated industrial zones et al. large-scale projects for roads and therefore the institution of a network of best transportation, additionally to cross-federal railway to attach vital residential and industrial centers within the country through a secure, cost-efficient network, also as linking ports to make an economic supply setting that serves transportation of raw materials, production inputs and merchandise and product at intervals the native market or for export and import through a network of integrated transportation by land, ocean and air movement. The UAE is strategically situated to become an advertisement and supply hub for a manufactured good.
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