Ibrahim M. Abdalla Alfaki, United Arab Emirates University, UAE
Purpose: The United Arab Emirates (UAE) has recently embarked on raising awareness about economic diversification with particular focus on the fundamental concepts of a knowledge economy (KE) across the private and the public sectors. The UAE strategic vision 2021 advocates for increasing investment in science and technology and research and development (R&D) with the aim of turning the economy into a KE. So far, according to the latest Digital Opportunity Index (DOI) and World Economic Forum reports (2011), the country continues to lead the Arab world and many other countries in the region in technological infrastructure and the adoption of ICT. The objective of this paper, therefore, is to empirically evaluate the extent of the UAE success in utilizing knowledge and available technological infrastructure in domesticating the manufacturing and production of technology products as an important source of wealth generation.
Design/methodology/approach: The evaluation is based on studying the time trend (1981–2010) of exports and imports of non-oil technology products. Furthermore, in line with Porter’s model of national competitiveness, a regression analysis is employed to investigate factors that influence UAE technology exports, excluding re-export.
Findings: Evidence reveals that the UAE manufacturing sector is clearly gaining momentum and its contribution to both the total GDP and to the non-oil GDP is increasing over time. However, the country is unfortunately experiencing an increasingly chronic balance of payments deficit in technology as a result of increased dependence on technology imports. Regression analysis results indicate that recent growth in UAE technology exports is mainly attributed to increasing development in the country’s technological infrastructure. The role of inward FDI in promoting UAE technology exports is still insignificant.
Originality: Evaluation of the UAE level of diversification and utilization of knowledge and technological infrastructure, based on updated data, is a necessary step in assessing achievements and adoption and application of future policies and programmes.
Keywords: Knowledge economy, Diversification, Technological exports, R&D, Evaluation
Paper type: Research paper