Dubai as Rentier State

fall in Arab Emirates Political parsimony The success of the United Arab Emirates come along directly from its high r heretoforeue made from crude anele exports. This estate was a desert region that turned into an scotch boom in the juvenile years. According to CNN humankind News, Abu Dhabi, the capital of the United Arab Emirates is the richest city in the world. The Emirates citizens, who set on one-tenth of the thinkets oil and demand almost $1 one thousand million invested abroad, are worth ab egress $17 million apiece. Because of this factor, the UAE is considered one of the wealthiest countries in the world. However, turmoil struck the unc come forwardh with the recent global recession in 2008 that led to contradictions in their global oil wealth. Now that the country is find from this d proclaim point, the state infers global oil position will reanimate in sales on a slow but watertight pace. In this research paper, I will demonstrate how the United Arab Emir ates functions beneath a rentier thriftiness and the country has not built the political stableness they intended which led to challenges faced by the people and g all overnment.The rentier model of the United Arab Emirates depicts the stability of the political economy from its high oil revenue enhancements. A unmatched characteristic of the prosperity of the country stems from the fact of the discovery of oil. What oil mathematical product real(a)ly means is a natural resource taken from the landed estate and not an existing good that is produced through sales. What distinguishes a rentier economy from separate countries is the oil clams and its high dependence on one necessity for extraneousers. A rentier is a group or entire state that earnings on income from property or investitures, and in much(prenominal) a case oil from the UAE.The rentier is not intricate with the making of the incentive, but is entitled to a high amount of the money. In his journal, The Rent ier State in the Arab World, Beblawi explains what a rentier economy is based upon. He claims, There is no existence of a real rentier state. Every rentier economy is an economic complex body part with the backings of external rent advent into the strains (Beblawi). This rent is vital to the measurement of success in a rentier economy. This is the key factor in holding the economy together with bug out a domestic sector. Also, a entier economy doesnt have many hands involved with the generation of the wealth. The creation of such wealth is maintained and kept at heart a small number of elite groups. The governance of the country is able to imprecate on the discovery of oil mines to external profit being it is a main factor in the countys high success rate. Previously, this money would have to come from the population, such as merchants and artisans, but now it can be received precociously from dependent revenue provided by the oil. The settlement betwixt the social group and t he workers create a social contract.About seventy to cardinal percent of the lower to middle class, also known as the confinement force, participates in the production of oil in the United Arab Emirates. Whereas a liberal percentage is involved in the production, a small fraction of hostelry partakes in the distribution, and benefits of the revenues. According to the Financial Times, Due to the high volume of oil distribution and price increase, the early 1970s began an era of investments in pains, services, public works, and investments in infrastructure.Because of these investments, a high demand for a custody grew which surpassed the demand of bring home the bacon (Chazan). This chain reaction led to a foreign workforce that would come in with the national workforce. It became such a huge phylogenesis that the foreign workforce evolved into the primary workforce in all sections of the economy. Developing the infrastructure dodge was one of the main fields where the Emir ates sought improvement through some some other investments. Works such as roads, highways, airports, telecommunication networks, and governingal ministries were built.They revolutionized the states from a devoid into a highly developed country. The Arab monarchs then invested in another industry so they could ensure a long term source of income in a time where oil prices constantly changed. The last investment was an investment in social needs and services. These services included health care, educational improvement, and even housing facilities. The three areas of investment was designed for one pop the question. That purpose is for a smoother more easy form of oil transportation, which would excrete to a boom in the economy.The wealthy Arab monarchs spared no expense as they imported laborers from many countries. The countries in which they imported labor were India, Pakistan, Great Britain, Germany, and even the United States of America. Despite the heavy importation of la borers, it was only meant to be temporary, as the Monarchs believed the national population would serve as the workforce and take over where the foreign labor force left off. The Monarchs thought wrong as the national population were not too fond of taking manual of arms labor jobs that were unpleasant or difficult.This created a problem of social structure within the Emirate people of the UAE. The population didnt want to take on these manual jobs after the coalition set up a system of other high industry incomes. This led to influx of millions of foreign labors who remained in the country, which the government had no intention for tending to. A short term plan turned into a drawn out problem for the country. The astonishing period of the United Arab Emirates is that they were able to create an oil revenue that provided the rulers with an upper hand.This country has built an entire welfare state in which it doesnt have to popularise tax from its subjects. According to The New Yo rk Times, Oil is the mainstay of the UAE economy and the operate force behind it. If there were to be a negative development in the countrys financial situation or on the policy of the state, the country will be faced with direct implementation due to these factions. The oil prices have always been unsteady in the global market which has created a myriad amount of oil revenues. Certain common citizens are allowed to own their own portion of oil.But unfortunately, some of the oil revenues are given out in the federal government through high Emirate elites which hinders on the countrys cleverness of generating their own in-housed wealth. The Emirate of Abu Dhabi earns the sanction of creating more than 90% of the total contribution to the oil market to secede in their countrys fortune (CIA World Factbook). Dubai also contributes to this fund as well. The government structure of UAE, known as a federation system, do not procure ownership in the federal profits of oil so this makes t he country highly susceptible to the dependence of the opinion family of Abu Dhabi.This ultimately makes the oil revenuers indirectly dependent. What toughens the situation for the country are the changing oil prices constantly that is not controlled by government or elite officials. State planning is hard to carry out under such circumstances. This is bound to stem from state profit being relied upon oil revenue that isnt promised for today and tomorrows plans. This creates a setback from the people of the Emirates who cannot be supported by the federal budgets of such an economy thriving on the oil industry.There is an annual deficit of millions of dirhams (UAE currency) because of this fluctuation in oil prices. The focus of this essay has been to go how the United Arab Emirates try to obtain political firmness as a rentier state and not follow through with it successfully for the inhibitions of the people. The rentier theory points out that loyalty in politics is rooted in e conomic motivation. sparing welfare is meant to go hand in hand with political opposition. Yet, the economic welfare of the people are closely linked to oil revenue of the United Arab Emirates in the world market.The problem of foreign labor plays a part in the states welfare policy as well. The importation of foreign labor was vital for the economic growth that started as a conduce of the oil price increase. The government thought that the national population would be able to give the needs to fill the workers place. This assumption turned out to be wrong. This essay has shown that the rulers welfare policies have made nationals skeptical in their choice of labor. In addition, this essay has depicted how the rentier model can joy the explanation of Abu Dhabis leading role within the federation.These facts have strengthen the assumption that the rulers use the oil economy as an instrument in securing stability but not to the countrys best ability. Bibliography Beblawi, Hazem. Th e Rentier State in the Arab World. government activity of the Middle East (2009). Web. 5 May 2012. Chazan, Guy. Oil Finally align Strategic Plans. Financial Times. 16 Apr. 2012. Web. Economy of UAE. CIA World Factbook. 12 Apr. 2010. Web. Gared, Davidson. Economy and Financing Projecting the UAE. The New York Times. 16 Mar. 2011. Web. Gimbel, Barney. The Richest City in the World. CNN World News. 12 March 2007.