UAE celebrates 40th anniversary what do the next 40 years have to offer?

The success of the United Arab Emirates in creating the nation with the fifth highest per capita GDP in the world in a dusty desert location is astonishing. So much could have gone wrong in the past 40 years as other countries that won their independence from the British Empire have amply demonstrated.

The UAE today is a multicultural melting pot of Arab, Asian and European nationals living alongside the Emirati citizens who comprise less than 20 per cent of the population of eight million. It’s also an economic hub for a diverse and geopolitically challenged region of more than a billion people.

Beacon of stability

A beacon of political stability in the Arab Spring the federation has attracted even more human and monetary capital as a consequence this year. Newcomers find a country where Arabic is spoken less than English and Muslims are in a minority. It’s often not what they expected.

Looking back over the legacy of 40 years of oil-fuelled economic diversification and the role of the expatriate majority in making this work is obviously there. But equally nobody could argue that the Emiratis have not been extremely skilful in handling this talent to their advantage. Openness and friendliness has paid big dividends.

In the past decade there has been a switch of policy, encouraging more expatriates to make a long-term home here through buying real estate. This brought significant investment as well as retaining talent that might otherwise have been more transient.

To keep moving forward at the speed of the past four decades will entail a cementing of these economic rights and the development of the appropriate legal framework to protect property rights for all.

The UAE would also be well advised to maintain a laissez-faire approach to labour migration that allows firms to recruit from wherever they think appropriate, a considerable competitive advantage that has contributed greatly to the wealth of the federation.

Tax haven

The same is true for taxation or rather the lack of it. In a world of rising taxation levels being a tax haven is even more of an advantage. It will attract those hounded out of their own countries by punative taxation and just has to be the basis of what will surely become a major financial services centre.

But underpining the economy of the UAE will always be its oil and gas reserves. The outlook for hydrocarbon prices in a world of scarce energy resources and growing demand from emerging markets is very strong, and money printing by global central banks can only help keep prices high.

If you had asked somebody 40 years ago for two reasons to be optimistic about the UAE it would have been oil wealth and good leadership. That remains as true today. The salary rises of up to 100 per cent for UAE federal employees this week are a marked contrast to the austerity in many nations of the world right now.