It is now almost half a century since the defining event in the modern history of the area that is now the United Arab Emirates. That was, of course, the discovery of oil beneath the coastal waters of Abu Dhabi by the British in 1958. Two years later, oil was found onshore, and in 1962 the first exports of crude brought the trickle of what was to become a flood of revenue.

Over the decades, oil has brought untold wealth and transformed a society that had remained more or less unchanged for centuries. The British protectorate came to an end in 1971, and it was in the same year that the six sheikhdoms – Abu Dhabi, Dubai, Sharjah, Umm al-Qaiwain, Ajman and Fujairah – formed the UAE, which formally became independent in December. In February 1972, they were joined by the seventh emirate, Ras Al Khaimah.

The dynamic force behind the subsequent political, economic and social development of the country was Sheikh Zayed Al Nahayan of Abu Dhabi, who initially inspired the establishment of the federation, and became its first president. His long rule, ending with his death in 2004, saw the country’s oil wealth channelled into nation-building, transforming the UAE into a modern state. Sparsely populated desert kingdoms inhabited by nomads, herdsmen, fishermen and pearl divers have become world-class cities bristling with skyscrapers, banks, luxury hotels and shopping malls. Where once there was nothing but sand and scrub, now there are wide tree-lined boulevards, lush gardens and pristine golf courses. The population has swollen to an estimated 4.4 million, 80 per cent of whom are expatriate workers.

It is petroleum, of course, that has fuelled this remarkable transformation. The UAE possesses the fifth largest oil reserves in the world, and the fourth largest reserves of natural gas. Production is around 2.8 million barrels of crude per day, and there are plans to raise it to 4 million bpd by 2010. However, it would be wrong to assume that the economy of the UAE rests entirely on a single, ultimately unsustainable, economic resource, vulnerable to the vagaries of the international market. Investment and diversification are today’s guiding principles, and have launched a new era of development.

SHEIKHA LUBNA AL QASIMI Minister of Economy

SAEED AL MANSOORI Minister of Government Sector Development

Sheikha Lubna Al Qasimi, Minister of Economy, sums up the choice that had to be made. “This is a small nation and it has wealth of oil,” she says. “We could either sit on our oil wealth and become a social welfare society, or we could expand our economic base by attracting foreign investors and creating opportunities for them, becoming a global player as well.” Oil, she points out, does not create jobs, but the wealth from oil does. “By judicious use of our oil wealth we have developed an excellent physical infrastructure, a competent administration and an educated population. A lot has been done in terms of diversifying the economy in a number of sectors, including tourism, finance, manufacturing and the services sector in general.”

Last year, UAE recorded a nominal – unadjusted for inflation – GDP growth rate of 23.4 per cent, with an overall nominal GDP of around £80 billion. The contribution of the non-oil sector was 62.5 per cent, driven principally by construction and tourism. The finance, manufacturing, transport, telecommunications, healthcare and education sectors are all expanding. There has been a marked increase in non-oil exports. The free trade zones are booming, and the country has a rapidly increasing role as a re-export and distribution centre. A report in April 2007 by the World Economic Forum ranked the UAE as the most competitive economy in the Arab world and the 29th most competitive globally.

In addition to reinvestment of petrodollars, a major factor in the development of the UAE in recent years has been the tremendous increase in the amount of foreign investment coming into the country. The UAE leads the Middle East region in attracting FDI, ranking fifteenth in the world out of 144 economies in UNCTAD’s FDI performance index. IMF figures in 2006 indicated an inflow of £6.3 billion compared with £4.5 billion in 2004. This investor interest is prompted by political stability, dramatic economic growth and the favourable business environment that the government has striven to create and continues to improve.

The federal government has shown determination to raise its own game, through moves towards greater openness, effectiveness and efficiency. A recently unveiled government strategy plan calls for modernisation of the civil service and improvements in government services to bring them in line with international standards. Special emphasis will be placed on education, healthcare and judicial services. E-government programmes and coordination between federal and local authorities are to be strengthened.

Sultan Bin Saeed Al Mansoori, who heads the new Ministry of Government Sector Development, says that an evaluation has been carried out at every ministry. “We have looked at the services provided to the public according to their standards, their speed and the way they can combine with each other. We have also looked at the implementations of technology and how that can enhance the service process that we have.”