Abu Dhabi is a key member of the union

Having seen a five-fold increase since 2001, Abu Dhabi’s GDP reached an estimated $260bn in 2013 at current prices. The hydrocarbons industry comprised 55% of output, a two-point drop in comparison to the year before, highlighting the increasing diversity of the emirate’s economy.

Oil and gas are still the source of the vast majority of public revenue, which has been put to good use as the government rolls out a programme of diversification into sectors such as manufacturing, tourism, aerospace, defence, finance and logistics. It has also been investing heavily in social welfare initiatives, with a focus on health and education. Led by the rapid expansion of Abu Dhabi City, the emirate’s population has risen to 2.45m.

The pace of development has necessitated employing a large number of overseas workers, and Emirati nationals currently represent around one-fifth of the total population, according to Statistics Centre - Abu Dhabi (SCAD). To support the growing workforce and the establishment of new businesses, the emirate has invested heavily in infrastructure, mostly in transport and utilities.

VISION: The emirate’s long-term strategy is outlined in Abu Dhabi Economic Vision 2030, which was launched in 2009. Three entities took the lead in the development process: the Abu Dhabi Department of Economic Development, the Abu Dhabi Council for Economic Development and the General Secretariat of the Executive Council.

Using Economic Vision 2030 as a blueprint, the government intends to spearhead the development of a diversified and sustainable economy that is integrated into the global market. Abu Dhabi is building a high-added-value economy with a focus on boosting activity in key non-hydrocarbons sectors, including tourism, manufacturing, logistics, health care, education, financial services and telecoms. Economic Vision 2030 projects that non-oil sectors, including petrochemicals, will contribute 64% of Abu Dhabi’s GDP by 2030. Moreover, the government is actively encouraging private initiatives and foreign direct investment as growth drivers. Strong Emiratisation policies are in place to ensure local workforce participation in the emirate’s economy.

The UAE Vision 2021 plan provides a strategic development framework at the national level. This document lays out both the UAE’s comprehensive economic goals, as well as how these will be implemented across different areas (see interview).

GOVERNMENT: The UAE government in Abu Dhabi City oversees various key responsibilities, including national security and foreign affairs. The president of the UAE is customarily the ruler of Abu Dhabi, while the ruler of Dubai is the country’s prime minister and vice-president. As such, the current president is Sheikh Khalifa bin Zayed Al Nahyan, who took the position in 2004 after the passing of his father, Sheikh Zayed bin Sultan Al Nahyan. Sheikh Mohammed bin Rashid Al Maktoum, the ruler of Dubai, has been the prime minister and vice-president of the UAE since 2006.

The Supreme Council of Rulers, which is made up of the hereditary rulers of each of the seven emirates, is the UAE’s primary national policymaking body. Other federal bodies include the Council of Ministers, the Federal National Council (FNC) and the federal judiciary. The Council of Ministers, also known as the UAE Cabinet, is the executive branch of the country’s government. It is presided over by Sheikh Mohammed bin Rashid Al Maktoum and composed of the UAE’s various ministers, who handle internal and external affairs.

The FNC is the legislative branch of the UAE government, and serves as support to the executive body. It is composed of 40 members, 20 of whom are appointed by the rulers of the different emirates and hold the council’s political power. The remaining 20 are elected by a small electoral college and provide advisory support. Finally, the federal judiciary, which includes the Federal Supreme Court and the Courts of First Instance, resolves disputes among emirates and decides whether or not federal laws are constitutional, among other tasks.

Aside from their federal duties, each of the seven emirates maintains a substantial amount of economic and political autonomy. Abu Dhabi, the UAE’s wealthiest emirate in terms of GDP, has used this autonomy to invest heavily in a series of economic diversification programmes, in addition to social and cultural development initiatives. Sheikh Mohammed bin Zayed Al Nahyan is the crown prince of Abu Dhabi, as well as the chairman of the Abu Dhabi Executive Council and the deputy supreme commander of the armed forces of the UAE.

The Executive Council is the executive branch of Abu Dhabi’s local government, and is composed of the chairmen of the emirate’s major public institutions. It is also responsible for both approving and monitoring the progress of government-sponsored projects, and providing oversight for government operations as a whole.

Abu Dhabi is considered to have more influence on national affairs and foreign policy than the five Northern Emirates. For instance, the ruler of Abu Dhabi (and additionally Dubai) holds veto power on the UAE’s Supreme Council of Rulers.

HISTORY: For thousands of years, much of the area that includes Abu Dhabi has been a regional centre for trade activity. The Umm An Nar civilisation, for example, was active from roughly 2600 BCE to 2000 BCE in an area that now includes parts of the UAE and northern Oman.

According to archaeological work, Al Ain has likely been inhabited for around 4000 years. As home to one of the few oases in the area and situated at the foot of Jebel Hafeet, the town has occupied an important location for millennia.

Throughout the following centuries – and particularly during both the Sassanid and Byzantine empires – the area was a fishing and trading centre. In the 16th century the pearling industry took off in the emirate, and indeed, pearl diving was a significant source of income for the area up until the early years of the 20th century.

The history of modern Abu Dhabi can be traced to the Bani Yas, a nomadic Bedouin ethnic group that settled around the Liwa Oasis before the 1600s. In 1761, members of the Bani Yas tribe first travelled to the island, according to legend, in pursuit of a gazelle (leading to it being named Abu Dhabi, which literally means “father of the gazelle”). After finding fresh water there, the settlers began establishing permanent residences.

Initially the Al Nahyan family, which headed the Bani Yas tribe, remained in Liwa Oasis, but in 1793 they made a permanent move to Abu Dhabi. The Al Maktoum family, which rules Dubai, was also part of the Bani Yas tribe. Primary economic activities during this period included camel herding, date farming, fishing and pearl diving.

During the late 1800s the settlement thrived on the back of the pearl trade, and in 1892 the town’s ruler, Sheikh Zayed bin Khalifa Al Nahyan, signed an agreement with the UK ceding control to the British, who wanted to preserve their trade route to India in exchange for protection from the Ottoman empire. This would see the emirate join the Trucial States and become a British protectorate.

After the death of Sheikh Zayed bin Khalifa in 1909 and the collapse of the pearling industry, the emirate’s prosperity declined. However, after oil was discovered elsewhere in the region, Abu Dhabi’s fortunes changed significantly.

The first oil concessions were granted in 1939, but, due partly to exploration efforts being put on hold during the Second World War, oil was not discovered until well into the 1950s. The emirate’s first oil exports began in 1962, and have driven a transformation of its economy and society. In 1966 Abu Dhabi joined OPEC as its ninth member.

Five years late, in 1971, the emirates of Abu Dhabi, Ajman, Dubai, Fujairah, Sharjah and Umm Al Quwain came together to form the UAE. The seventh and final emirate, Ras Al Khaimah, joined the federation in 1972. Sheikh Zayed bin Sultan Al Nahyan, who became the president of the new country, began the process of developing and modernising Abu Dhabi and the greater UAE. When Sheikh Zayed passed away in 2004, his son, Sheikh Khalifa bin Zayed Al Nahyan, took over where he left off.

GEOGRAPHY & ADMINISTRATION: Covering 87% of the UAE’s total land area, Abu Dhabi is the largest of the seven emirates. Only around one-third of its territory is populated, with the remaining area covered mainly by desert.

Abu Dhabi’s coastline stretches along roughly 700 km of the Gulf. It shares borders with the emirates of Dubai and Sharjah to the north, Saudi Arabia to the south-west and Oman to the east. The emirate is organised into three separate administrative areas: Abu Dhabi City, Al Ain and Al Gharbia, with the latter previously known as the Western Region.

ABU DHABI CITY: Abu Dhabi City, the capital of UAE and the largest city in the emirate, is situated on an island 250 metres off the coast. Most of the city is located on the island, but after continuous growth it has spread out to areas on the mainland and neighbouring islands such as Reem, Yas and Saadiyat.

The majority of the emirate’s population lives in Abu Dhabi City, which was home to 1.5m people in mid-2013, according to figures from SCAD. As a result, Abu Dhabi City has a much higher population density – 136.2 people per sq km in 2013 – than the emirate as a whole (41.2).

AL AIN: The emirate’s second-largest city, Al Ain, is located further inland on the border with Oman, 160 km from the capital.

The Al Ain region is home to Abu Dhabi’s most fertile land and, consequently, a substantial number of agricultural developments, and it is considered the emirate’s agricultural capital. In terms of the total agricultural holdings in Abu Dhabi – estimated at 752,839 dunums (a dunum is roughly 0.1 ha) in 2013 – around 60%, or 446,898 dunums, were in Al Ain, according to SCAD figures.

The region has a well-developed education sector and a burgeoning local aerospace industry, as well as an increasingly popular tourism destination, with a particular focus on the cultural and ecotourism segments (see Al Ain chapter).

The population of the region of Al Ain stood at an estimated 653,200 in 2013, according to SCAD, equal to 26.6% of the emirate’s total population. This gave the region a population density of 48.8 people per sq km, up from 33.2 people per sq km in 2005.

AL GHARBIA: Covering 60,000 sq km and accounting for 71% of the emirate’s total land area, the region of Al Gharbia (Western Region) is characterised by its natural resources and wealth. It possesses 90% of the emirate’s total hydrocarbons reserves, which in turn account for around 90% of the UAE’s total reserves, and the oil and gas sector is the main driver of the region’s economy.

The region includes one of the country’s most important industrial centres – Ruwais – and the increasingly important tourism destination of Liwa, located in the oasis of the same name, and it is the site of a number of major planned investments, including the expansion of one of the largest refineries in the world, the largest sour gas project in the world and a nuclear power plant (see Al Gharbia chapter). According to SCAD’s mid-year 2013 estimates, Al Gharbia’s population was 301,400, giving it a population density of 8.6 people per sq km. The region has seven main towns: Madinat Zayed, the administrative capital; Liwa; Ghayathi; Ruwais; Mirfa; Sila; and Delma Island.

CLIMATE: The climate in Abu Dhabi is arid and subtropical. It is hot and humid on the coast, and hot and dry inland. Daylight temperatures surpassing 40°C are to be expected between June and September, although these fall to 24°C during the winter season from December to March. Abu Dhabi is known for having blue skies and sun year round, as the average yearly precipitation does not exceed 60 mm.

DEMOGRAPHICS: SCAD estimates put the emirate’s total population at 2.45m in mid-2013, up from 2.16m in 2011 and 1.83m in 2009. As of mid-2013 Emiratis made up 20.2% of the population, with expatriates (primarily foreign workers) accounting for the remaining 79.8%. The number of foreign labourers residing in Abu Dhabi has altered the emirate’s gender mix in recent years. As of mid-2013 some 71% of the population was male.

Like most other countries in the Middle East, in recent years the UAE’s youth population has grown substantially. As of mid-2012, according to SCAD, more than 52% of Abu Dhabi’s total population was below the age of 30, while in excess of 79% was below 40 and over 92% was below the age of 50.

LANGUAGE: While Arabic is the official language, English is widely spoken due to the large expatriate community in the emirate. Most public signs and restaurant menus are in both languages. Other languages in common use include Hindi, Urdu, Farsi, Chinese and Tagalog. Legal documents must be written or translated into Arabic before they can be submitted to government agencies.

RELIGION: Islam, the official religion of the UAE, has a far-reaching impact on daily life, business and social interactions. The country’s legal system, for example, is based on a combination of sharia precepts and guidelines, along with international legal standards. Islam informs other areas of life as well, including public behaviour, the calendar, marriage and cultural pursuits such as music, art and literature. Out of respect for Islamic practice, non-Muslims should refrain from both eating and drinking in public during the holy month of Ramadan.

The Sunni tradition is the dominant form of Islam in the UAE, and is practised by most Emiratis. However, Abu Dhabi City’s cosmopolitan population includes adherents of a variety of other religions, such as Christianity and Hinduism, among others. The constitution of the UAE, which has been in place since the country’s founding in 1971, guarantees freedom of religion in accordance with established traditions and customs.

ZHIC: Zayed House for Islamic Culture (ZHIC) was founded by Decree No. 10 of 2005, issued by Sheikh Khalifa bin Zayed Al Nahyan. ZHIC provides new Muslims with guidance regarding Islamic culture, and informs non-Muslims about the core values of Islam. The goals of Economic Vision 2030 are economic prosperity and business development, and ZHIC aims to further this by emphasising tolerance and cultural awareness. As part of its vision to introduce the core of Islamic culture, ZHIC takes part in a number of events such as the UAE’s National Day, in line with the motto “Many Cultures, One Community”.

ZHIC cooperates with entities such as the Ministry of Culture, Youth and Community Development to draw attention to the importance of the Arabic language through events like the Arabic Calligraphy Fair, in addition to visits to museums, heritage-related sites and iconic locations such as the Sheikh Zayed Grand Mosque in Abu Dhabi. There are also events to underline local culture in the framework of heritage village activities or folkloric renditions, and festivities such as Liwa Date Festival, Wathba Camel Race and Dubai International Horse Race.

In addition, ZHIC runs optional free Arabic courses for speakers of other languages as a welcoming gesture for expatriates. It also offers Islamic cultural education in languages other than Arabic. The General Authority of Islamic Affairs and Endowments, with which ZHIC works closely, cooperates with academic institutions such as Mohammed V University in Abu Dhabi and other international institutes, to enhance religious education and develop Arabic-language teaching methodology. There are also other government entities endeavouring to enhance religious discourse and develop education.

ZHIC adopts a forward-thinking educational curriculum that is the result of cooperation with some leading institutes in the realm of Islamic culture and civilisation, and its preparation takes into account educational approaches applied in various parts of the world. The curriculum uses educational technology in the form of audio, video and digital content, which is translated into various languages, and the organisation plans to make the most of other global developments in education.

GLOBAL RANKINGS: Throughout 2013/14 the UAE continued its efforts to improve the business environment, being recognised in the World Bank’s 2015 “Doing Business” report as one of the top 10 economies ranked by most improvements made. What makes this particularly impressive is the fact that the UAE was already building from a relatively high base, as most of the other top improvers were among the lowest-ranking countries on the index.

With an ease of doing business ranking of 22 out of 189 countries, one place above its 2014 position, the UAE leads the region, ranking above Saudi Arabia (49) and Qatar (50), as well as global economic powers such as France (31) and Japan (29).

For the 2013/14 year, the World Bank identified three key moves that contributed to the country’s improved rankings: property transfers were made easier through the introduction of service centres and a standard contract; credit bureau information was made more accessible and comprehensive; and new measures were introduced to protect investors and improve control of related-party transactions.

Of the 10 factors that contribute to a country’s ease of doing business ranking, the UAE ranks in the top 10 for five, including trading across borders (eighth), registering property (fourth), dealing with construction permits (fourth), getting electricity (fourth) and paying taxes (first).

Of the remaining factors, the UAE ranks as follows: enforcing contracts (121st), resolving insolvency (92nd), getting credit (89th), starting a business (58th) and protecting minority investors (43rd). Of special note is the ranking on protecting investors, which is a substantial improvement from 2012/13, when the country ranked 98th.

Meanwhile, in the World Economic Forum’s 2014-15 “Global Competitiveness Report”, the UAE ranked 12th overall, again leading the region ahead of neighbours Qatar (16th) and Saudi Arabia (24th). In terms of the individual components leading to this ranking, the UAE is ranked second in the world in terms of meeting the basic requirements for economic activity, which includes infrastructure (third), the macroeconomic environment (fifth), institutions (seventh), and health and primary education (38th).

In terms of efficiency enhancers the UAE ranked 14th, with high ratings for goods market efficiency (third), higher education and training (sixth), and labour market efficiency (eighth), although this component was restrained by financial market development (17th), technological readiness (24th) and market size (46th) – the final component being one over which the UAE has little control.

In innovation and sophistication, the last component contributing to the overall ranking, the UAE was 21st in the world, with strong ratings for both business sophistication (14th) and innovation (24th).