The United Arab Emirates, or UAE, and Saudi Arabia are two of the most powerful nations in the Middle East region. This is attributed to the blacks’ oil resources and speedy modernisation process.
Still, their overall economic goals and organisation entail significant dissimilarities. This blog will better cover those differences and similarities by doing so as simply and directly as possible.
Historical Background
Both the UAE and Saudi Arabia are economically dependent on oil. Saudi Arabia learned about the oil facility in 1938, while the UAE learned about it in the 1950s. Crude sales modernised and enriched these countries, which previously were barren desert lands.
Oil Dependency
Saudi Arabia is among the largest oil-exporting countries in the world. Hence, its economy is monocultural, with oil being the key product contributing over 70% of its income. Conversely, the UAE has gone further and has been able to diversify the economy. Crude oil exports are still significant as in Abu Dhabi but contribute less than 30% to the GDP. Dubai, one of the UAE’s vital emirates, depends much on trade, tourism, and property.
Economic Diversification
Thanks to understanding this, both countries have worked to diversify their economies and decrease the role of oil. Saudi Arabia unveiled Vision 2030, a plan to build essential sectors such as tourism, entertainment, and technology. Now, the UAE has its Vision 2021, the main directions of which include innovation, environmental issues, and smart cities.
Key Industries
- Saudi Arabia: Greater accord; the main industries are the oil and gas sector, petrochemicals, mining, and construction. Recently, the tourism sector emerged, and it now has projects like NEOM, a smart city.
- UAE: Some of the significant sectors include tourism, airlines, property, and financial services. It has become an international city for business with multinational corporations and investors. Another critical area that has received considerable attention from Abu Dhabi is renewable energy and technology.
Tourism
Currently, tourism is among the progressing industries in both countries.
- UAE: This can be summarised through Dubai, which is widely recognised for a specific sort of tourism. It encompasses landmarks such as Burj Khalifa and Palm Jumeirah, as well as luxury shopping malls. Places of interest include cultural collections such as the Louvre Abu Dhabi and parks, including theme parks.
- Saudi Arabia: As previously mentioned, the only recognised tourism was the Islamic holy sites visited in Mecca and Medina. However, with Vision 2030, Saudi Arabia expects to become the world’s tourist attraction centre. Such initiatives such as Red Sea Development and Al-Ula are aimed at tourism. Muslims can come for Umrah with a customised deals to explore more details. You just need to have Umrah Packages London if you are from London. All you need is a good travel agency with good facilities and can customise your package according to your needs.
Foreign Investment
The next point relates to investment attraction companies of both nations, which look at FDI options.
- UAE: The UAE also has free zones in which a foreign company can fully own a business without a partner from the UAE. Investors have preferred investing in Dubai and Abu Dhabi because these places have structural facilities and good investment policies for any business.
- Saudi Arabia: Today the door of Investment in Saudi Arabia is opening for foreigners. The government is trying to liberalise markets and offer special privileges to business houses. The PIF is significant in investing in different segments in different parts of the world.
Labour Market
In both countries, the labour markets substantially depend on expatriates.
- UAE: Currently, the total population of the UAE is approximately 52 million people, and the majority of them are foreigners; in fact, there are only 7.4 million UAE citizens in their own country. They are employed across all sectors, ranging from construction to finance to many others. The government is now targeting the portion of Emiratis, particularly in the labour market, to enhance the employment rate.
- Saudi Arabia: Pakistan’s labour force is equally reinforced by expatriate employees. The government has adopted policies for Saudisation that aim to create job vacancies for Saudi Arabian citizens.
Infrastructure
Infrastructure development is evident in the two countries with both accompanying expenditures.
- UAE: The UAE is favoured with all developed amenities and First-World infrastructure. Others include the Dubai metro system, the airport in Abu Dhabi, and modern roads. The UAE is also heavily investing in smart city projects and renewable energy technologies.
- Saudi Arabia: At the same time, Saudi Arabia has been experiencing a fast-growing infrastructure. Schemes like Riyadh Metro, new airports, and NEOM’s new initiatives are changing its face. The government seeks to develop a new constructive vision to facilitate Vision 2030 for one to be realised.
Economic Challenges
However, problems relating to the economy are encountered in both the United States of America and Australia.
- UAE: The UAE economy is volatile, especially due to changes in oil prices. Diversification measures do help reduce this, but the overreliance on the tourism and property sectors puts them at the mercy of global shifts. The COVID-19 pandemic, for example, affected these sectors by causing them to miss the marks set by their complementary industries.
- Saudi Arabia: Saudi Arabia also faces some disadvantages because of oil price fluctuation. Further, it is going through a social and economic transformation that is always tiresome and expensive. Unfortunately, the employment situation of Saudi citizens can still be categorised as problematic.
Financial Markets
Also, both countries have been able to develop financial markets.
- UAE: Dubai and Abu Dhabi have developed financial markets where investors from around the world invest. In this regard, the Dubai Financial Market ( DFM ) and the Abu Dhabi Securities Exchange ( ADX ) are significant markets to consider. Likewise, there are many banks and other related financial institutions in the UAE that provide different services.
- Saudi Arabia: Tadawul, Saudi Arabia’s stock exchange, is also among the largest in the region. After liberalising the state’s policies on foreign investors, it has experienced rising interest from foreigners. The government is also focusing on improving its financial sector as a key thrust of Vision 2030.
Innovation and Technology
That is why both the economies’ futures depend heavily on innovation and technology.
- UAE: The United Arab Emirates is one of the region’s most technologically advanced and leading countries. Organisations and companies such as the Dubai Future Foundation and Masdar City support the advancement of research and development in utility fields such as energy and artificial intelligence.
- Saudi Arabia: Saudi Arabia also has IT investments, and its future project is NEOM, which is built for innovation. It is also trying to help startups and technology corporations diversify their economies.
Social Development
It is essential for the governments as both countries’ social development is a definite value.
- UAE: It is involved in education, health, and women’s issues, particularly in the UAE. It has done well in developing the quality of life of its citizens and residents.
- Saudi Arabia: It should also be noted that Saudi Arabia is currently experiencing large-scale social changes. The social status of women has increased over time regarding their education, working opportunities, and many other factors. The government is also funding education and health to improve people’s social well-being.
Conclusion
The economic agendas of UAE & KSA are almost different but are akin in a way that they are strategic partners for each other. Technologically, Saudi Aramco and the UAE’s ADNOC are also trying to diversify away from oil, although they have different strategies, according to the paper, depending on their advantages and disadvantages. The UAE primarily concentrates on tourism, property, and banking and Saudi Arabia on new sectors through mega plans and other changes.
Of course, there is still a long road, but both countries are ready to remain essential participants in the world economy. This comparison demonstrates how the UAE and Saudi Arabia will act regarding their economies in the future. Activities influenced by demographics, innovation, and a focus on improving social services will further define the economies of the region.
