507The United Arab Emirates: The Twenty-First Century BeckonsJim Grant ■ Fatema Shabbir Golawala ■ Donelda S. McKechnieExecutive SummaryThe United Arab Emirates is quickly making its presence known on the world stage; thecountry is shifting away from its dependence on oil and diversifying into new businesssectors such as real estate, tourism, world-class sporting events, finance, and construc-tion. Development supported and encouraged by government, economic policy reforms,streamlined foreign investment regulations, and the multicultural lifestyle afforded tonationals and expatriates are contributing to exemplary growth. Despite uncertaintyin the regional political situation, the country is stable and at low risk. In sum, theUnited Arab Emirates appears intent on attracting businesses from many parts of theworld, now and throughout the twenty-first century. © 2007 Wiley Periodicals, Inc.INTRODUCTIONThe most lucrative business market in the Arabian Gulf region is the United ArabEmirates. The importance of the UAE in the global arena is a product of its strate-gic location connecting the east and the west, its liberal and competitive businessenvironment, and the government focus on diversifying from its dependence onoil sources. Combined, these factors lead to the making of a country wherein thepolitical environment is stable and the economy is growing. As a result, doingbusiness in the UAE offers opportunities to investors and exporters alike. This article is an overview of key elements that relate to doing business in theUAE in the twenty-first century. Included is information about the changingJim Grant is a professor of marketing and management at the American University of Sharjah. Hisinterests include sales and sales management, sport marketing, and marketing strategy. In par-ticular, he is interested in the application of marketing activities to the rapidly expanding UAE andArab business practices.Fatema Shabbir Golawala is currently completing her master’s degree in strategic marketing at Uni-versity of Wollongong, Dubai. Her interests include business development opportunities in the UAE,particularly in relation to the government emiratization initiatives. Donelda S. McKechnie is an assistant professor of marketing at the American University of Shar-jah. Her interests include service encounters research (particularly business-to-business contextbetween organizations/institutions and contract workers) services and hospitality, and any cultur-ally diverse topics within the fast-changing and dynamic UAE environment.Thunderbird International Business Review, Vol. 49(4) 507–533 • July–August 2007Published online in Wiley InterScience (www.interscience.wiley.com). © 2007 Wiley Periodicals, Inc. • DOI: 10.1002/tie.20155governance structure, the investment climate, regional politicalunrest, and the latest hot economic sectors. The United Arab Emirates—In BriefThe United Arab Emirates is an oil-rich nation; 80% of the nation’srevenues is derived from oil sources. However, the government is try-ing hard to diversify the economy from being oil-dependent (Bhat-tacharya, 2006). Other sectors, such as tourism, real estate, finance,and construction, are playing a more significant role in the country’sdevelopment. Pursuing this strategy is necessary for the whole coun-try to grow as only one of the seven emirates—Abu Dhabi—has vastoil holdings. The wealth from oil is depicted in the relative affluence of the popu-lation. The 2005 census determined that the UAE population is 4.1million (Salama, 2006); 20% are UAE nationals—51% under 20 yearsof age—and 80% are expatriate. The government is undertaking emi-ratization programs, which are largely intended to provide, regulate,and promote employment for UAE nationals, particularly the young. Of the seven emirates, Dubai is certainly the most prominent. With acurrent population of 1.3 million (“Dubai Population Soars,” 2006),it is becoming increasingly well known for its world-class sportingevents, shopping festivals, and high-profile tourist attractions like theski hill at the Mall of the Emirates. Dubai’s marketing efforts areattracting global attention to the emirate, while also creating aware-ness about the country. POLITICAL STRUCTUREThe United Arab Emirates was constituted on December 2, 1971.The country is set up as a federation of seven emirates or states. AbuDhabi is the capital. The others include Dubai, Sharjah, Ajman,Fujeirah, Umm Al Quwain, and Ras Al Khaimah. The UAE is a par-tial monarchy headed by His Highness Sheikh Khalifa bin Zayd Al-Nahyan. Sheikh Khalifa succeeded his father, the late Sheikh Zayd, inNovember 2004. The country was principally set up as a Sheikhdom, with establishedpositions of president, vice president, a Council of Ministers, aSupreme Council of Rulers, and a National Assembly. Under theconstitution, each of the emirates holds substantial power to ruleindependently from the other six, and each allocates a portion of itsJim Grant ■Fatema Shabbir Golawala ■Donelda S. McKechnie508Thunderbird International Business Review • DOI: 10.1002/tie • July–August 2007The United ArabEmirates is anoil-rich nation;80% of thenation’s rev-enues is derivedfrom oil sources.revenues to the country’s central budget. The current politicalframework includes five federal authorities: the Federal SupremeCouncil, the president of the union and the vice president, the Cab-inet (Council of Ministers), the Federal National Council, and theFederal Judiciary.The Supreme Council of Rulers is the highest federal authority in thecountry: “It has the power to decide policy, elect the federal Presi-dent and his deputy, admit new members to the federation, andappoint and dismiss the Prime Minister and the judges of the FederalSupreme Court” (Economist Intelligence Unit [EIU], 2006a, p. 7). The Supreme Council elects the Cabinet that is headed by the primeminister, a position currently held by Sheikh Mohammed bin RashidAl-Maktoum, the vice president of the UAE and the ruler of Dubai.In 1994, Sheikh Mohammed was appointed Crown Prince of Dubai.In 2006, Sheikh Mohammed became ruler after the untimely passingof his brother Sheikh Maktoum, who had held the position previ-ously. Sheikh Mohammed has been a driving force behind the eco-nomic development of the country, particularly Dubai, as the UAEmoves to reduce the level of dependence on oil and diversify intomanufacturing, tourism,