Foreign trade crucial to UAE

Foreign trade in the UAE, particularly in Dubai, will inevitably continue to be a major source of economic growth, according to a latest study conducted by the Dubai Economic Council, or DEC. Because of the dualistic nature of the UAE economy, such as oil exports from Abu Dhabi and non-energy exports from Dubai, the delineation of the UAE and Dubai trade structure and patterns are important. Dubai has specially benefitted immensely from its strategic geographical location and it has also developed a world-class transportation and logistics network aimed at promoting Dubai as a leading hub of international trade, the policy research added. “Effective participation in international trade has enabled the economy of Dubai to diversify and grow. However, improving its competitive capacity, building a resilient strong economic base, and profiting from the opportunities provided by fast-changing global markets require a comprehensive trade policy to address some of the issues inherent in its trade structure and patterns,” the study suggested in a statement released on Saturday. The study reveals that foreign trade is important for small open economies to provide expanded demand for its exports and raise productivity of domestic firms engaged in foreign trade activities. Also important for technology adoption, thereby, increasing production capabilities of domestic economy. Dubai not only accounts for significant non-energy exports in the UAE, but also dominates its re-exports and import activities. Dubai’s exports and re-exports appear to be concentrated, both in terms of product space and partners. The emirate’s export and re-exports are concentrated on goods with low technological content and with little linkages with the rest of the economy. Dubai is heavily concentrated in structure and patterns of its foreign trade. Major exports (80 per cent) comprised of three groups of goods (semi-precious stones and jewellery and base metals (63 per cent), base metals (10 per cent) prepared foodstuffs (seven per cent) and light and heavy manufacturing negligible. The exports cater to Indian market. Major re-exports are also concentrated, 47 per cent semi-precious and jewellery (mainly to India and Switzerland), 16 per cent vehicle, machinery and equipment (to GCC countries, with Saudi Arabia dominating). Similarly, Dubai imports also concentrated in structure and patterns. Semi-precious stones and jewellery (34 per cent), sources from India, vehicle, equipment, machinery and electronics (28 per cent) from the OECD and China.