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Applied Economic Policy Design in a Developing Nation

Abu Dhabi - UAEDr. Thomas Kemp

University of Wisconsin – Eau Claire

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The Region

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People and Places

University of Wisconsin-Eau Claire

People and Places

University of Wisconsin-Eau Claire

Basic Macroeconomic Data GDP – 620,316,000,000 AED (169 Billion USD) GDP Growth Rate – 15.9% Oil Share of GDP – 49.7% Per Capita GDP – 315,300 AED (86 Thousand USD) Non-Oil Exports - 11,610,900,000 AED (3.1 Billion USD) Imports – 86,574,100,000 (23.5 Billion USD) Currency – Dirham – Pegged to Dollar at a constant

3.675/1

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Foreign Trade Data Primary Exports

– Oil and Refined Petroleum Products

– Transport Vehicles– Plastics, rubber, and

articles thereof– Base metals and

articles of base metals

Primary Imports– Machinery– Transport Vehicles– Base Metals and

articles of base metals– Plastics, rubber, and

articles thereof– Products of the

Chemical or allied industries

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History Recent

– Originally seven separate Emirates under the protection of Great Britain. (Trucial States)

– Gained Independence and Seven Emirates came together to form the UAE in 1971.

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Task: Determine the Economic Impact of the Maritime Sector on GDP of the Emirate

Issues;– No Employment Data by

industry beyond 1 digit ISIC

– No Wage Data by industry beyond 1 digit ISIC

– No Value Added or Output Data beyond 1 digit ISIC

– Reluctance to Share Data by All Parties

– No clear definition of the “Maritime Sector”

What to Do?– Normal methods for

determining economic impact are not possible.

– Studies in other sectors have been done using European data.

– Other studies still simply “estimate” impacts based upon those in other parts of the world.

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Never Say Die Result: “On this basis

direct revenues are about 3.2% of annual GDP while indirect revenues account for another 2.7%. There is no accounting within this report of induced impacts as the data necessary to determine them is not available at this time.”

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Getting There First Assess: What do

we know?– Building the

relationships» Statistic Bureau» Ports Authority» National Authorities» Ports Users» Tourism Authority

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Next Steps What can we say and what

can’t we say?– Only revenue data – Can’t

express as value added.– What exactly is the

Maritime Sector? – need to define.

– Some of our data is based upon studies that are not available and can not be scrutinized. Year 1909 1919 1929 1939 1949 1959 1969 1979 1989 1999 2009

0

5000000

10000000

15000000

20000000

25000000

30000000

35000000

40000000

45000000f(x) = 0.00142163 x⁶ − 0.431399 x⁵ + 48.5197 x⁴ − 2455.05 x³ + 57007.8 x² − 522081 x + 1212600R² = 0.994754311294212

World Production World Production

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Being Diplomatic Combining the two [direct and indirect impacts] gives us some idea about what the

economy would look like were there no maritime sector in the Emirate. That is, about 6% of the current Abu Dhabi economy is either directly involved with or wholly dependent upon the maritime sector. That said, it is almost certain that the total impact of the sector is significantly larger than this. Known employment in the sector (excluding fishermen) is over 3,500 individuals.

Ideally these amounts should be expressed in terms of value added rather than total revenues. The data is not available at this time to make these calculations. We therefore must make the problematic assumption that revenues equal value added. At such time that SCAD has the necessary data available a new study should be done. The below study should therefore be seen as a stopgap attempt to get some idea about the scope and scale of the maritime sector within the Emirate of Abu Dhabi.

See section nine (9) for the methodological problems associated with this assumption.

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Some Principles Saying “not possible” is not

always an option. Understand the objective –

most people don’t speak “Econ.”

Building local human resources is critical.

Be clear about results. Make polite suggestions about

how to improve data.

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Questions?