Much as in neighbouring Kuwait and Saudi Arabia, oil wealth has transformed this consortium of desert principalities into a modern state with a high standard of living. Economic diversification has reduced dependence and dampened the shocks of oil price fluctuations, yet nearly 40% of GDP is still directly based on oil and gas output.
Abu Dhabi accounts for about 90% of UAE oil production, while Dubai has developed into the UAE’s foremost centre of finance, commerce, and tourism. A generous fiscal regime has drawn large numbers of skilled immigrants to add to the already-sizeable South Asian population that make up much of the service and construction labour force. Governance in the Emirates is highly effective and efficient, with a high quality of regulation. The government has increased spending on job creation and infrastructure expansion and is opening up utilities to greater private sector involvement.
The country’s Free-Trade Zones, offering greater opportunities for foreign ownership and zero taxes, are helping to attract foreign investors, and the economy is benefiting significantly from high levels of capital investment. A massive construction boom has also driven economic growth. However, the boom has led to a surge in prices which, along with high oil revenue, cheap credit and strong liquidity, has led to rising inflation, resulting in worrying scores on indicators of market competition.
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The people of the UAE generally enjoy a high standard of living because of oil wealth. Incomes are high and unemployment is relatively low. However, migrant construction workers from Asia (whose conditions are not assessed by the Index, which addresses the circumstances of UAE nationals) are reportedly exposed to poor labour conditions on building sites.
The hot and arid climate, particularly in the summer months, mean that most activities are conducted indoors during the heat of the day and there is little abundance of nature, although, according to the Gallup World Poll, Emiratis consider the environment to be well-preserved. Public healthcare is extensive, and satisfaction with personal health is high -- even higher than long health-adjusted life expectancies would suggest.
Immigration, reflecting the extraordinary opportunities the UAE has created, has produced one of the most diverse populations in the Middle East. The UAE is also one of the most tolerant countries in the region. However, in common with most other Gulf states, women do not benefit from equal rights throughout much of society, and discrimination in the workplace is a particularly serious issue. Good governance contrasts with badly protected civil liberties and political rights, although a high level of satisfaction with freedom of choice is perceived by respondents to the Gallup World Poll.
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