Start Industry in United Arab Emirates

The economy of the UAE centers primarily on oil and oil-based industries, but the share of this contribution to the GDP fell from 70% in 1980 to an estimated 22% in 1998. This was principally the result of falling oil prices, but also reflected the growth in other sectors of the economy, such as manufacturing, finance and insurance, real estate, and government services. In 2002, the oil industry's share was at 24%, but manufacturing had reached 15.1% of GDP from only 3.8% in 1980. The oil industry accounts for about 30% of exports and provides 70% to 80% of government revenues. In Abu Dhabi, by far the wealthiest of the seven emirates, oil revenues are supplemented by income from a huge investment fund. Dubai joined the ranks of the oil producers only in 1971, and entrepôt trade continues to play a major role in its economy. In 2000, Abu Dhabi completed a capacity expansion program has increased the UAE's crude oil production capacity to2.6 million barrels per day (million barrels per day). Third quarter production in 2002 was 1.99 million barrels per day, somewhat over the official OPEC quota of 1.89 million barrels per day. Although 'Ajman has a small shipbuilding and ship repair yard and a recently established cement company, and Umm al-Qaiwain has a fish hatchery, a cement plant, and some small handicraft operations, these poorer emirates depend on federal aid—in effect, on revenue sharing by Abu Dhabi and Dubai. Oil production in Sharjah began in July 1974, and manufacturing and tourism there have been expanded. The number of factories in Sharjah rose from 74 in 1974 to 931 in 2000, increasing 13.4% from 1998. Ra's al-Khaimah has six large cement plants (three built since 1998), a pharmaceutical factory, a lime kiln, and the gulf's first explosives plant. Fujairah remains predominantly agricultural, but the emirate's government has also been developing an industrialization program, with emphasis on establishing mining-based industries. In 2002 it had 33 factories, a third producing nonmetallic metal products.

 

The process of industrialization gathered momentum after the formation of the federation in 1971. By 2002, manufacturing was second only to the oil sector in contributions to economic output. To diversify the economy, in the early 1990s the UAE introduced new industries, including aluminum, cement, pharmaceuticals, fabricated metals, processed foods, fertilizer, and explosives. Manufacturing as a percentage of GDP rose from 3.8% in 1980 to 7.7% in 1990 to 8.7% in 1995 to 15.1% in 2002.

 

According to the statistics of UAE's Ministry of Finance and Industry (MOFI), there were 2,153 registered industrial establishments in 2000 (up from 1,261 in 1995) employing 176,260 people. Forty percent of the units—854—were in Dubai, which also accounted for 46.7% of industrial investment ($3.6 billion of $7.76 billion). Abu Dhabi accounted for 25% of investment ($2 billion) but only 10% of industrial units (235). Sharjah and Ras Al-Kaimah had industrial investment of $790 million and $763 million, respectively, each about 10% of the total. Outside of the oil sector, chemicals commanded the largest portion of investment (14.5%), with food and beverages second (11.2%). Metal production accounted for 3.6% of industrial investment and garments 0.8%.