The Oasis ScenarioIntroductionThe Oasis scenario presents a case similar to the oasis found in the midst of a desert. The oasis turns out to be the most important asset for the travelers in the desert since it provides cool water and a resting environment for the travelers. Apparently, the desert environment characterized by intense heat and sand surrounds the oasis. Based on the Oasis scenario, it is proper to regard the UAE and other GCC nations as an oasis of stability in a region that presents the greatest likelihood of political instability.
The scenario also describes the regional instability challenge that poses significant risks to the continued development of the UAE. However, it is evident that the UAE has been able to reform its institutions and yield the necessary stability for its development. The UAE; just like other GCC countries has endeavored to develop strong identities by coordinating economic and diplomatic policies by using a strong internal market and technocratic governance. The paper presents the Oasis scenario in three parts. The first part provides an analysis of the current scenario and trends.
The second part identifies the potential threats impeding the sustainability of the current model. Finally, the paper provides appropriate recommendations for the policy makers. The domestic energy crisis is one of the main challenges that the UAE has encountered from the onset of the 22nd century. The crisis emanates from the increasing demand of energy amidst the lower than proportionate increase in generation of energy (Smeets & Bayar 10). Overreliance on oil and gas resources has strained the existing oil resources since the country also depends on oil and gas exports for its revenue utilized in economic development.
The energy crisis has created a significant challenge to policy makers thereby requiring them to diversify the energy portfolio especially in the generation of alternative energy. It is also imperative for policy makers to embrace less energy-intensive technologies such as wind and solar. Policy makers understand that the increasing demand for desalinated water and electricity has been responsible for the domestic energy crisis between 2007 and 2012. Despite the numerous efforts implemented by the government to address the challenge, the country has not addressed the issue adequately.
By 2008, salaries generated by the private sector accounted for a mere 11% of the UAE’s GDP (Herton 183). It was also evident that foreign employment constituted the greatest percentage of the private sector employment. The result was a necessity for investment into the private sector to stimulate economic development. Between 2007 and 2012, the UAE has endeavored to transform the economy into a self-sustaining economy driven by its stable market (WEF 9). Some of the strategies that the UAE Government has implemented towards attaining the objective include reforming the labor market, the education system and the economic policy.
The increase in foreign direct investment (FDI) as a result of the elimination of investment barriers also provides substantial evidence towards the decision of the UAE Government to create a robust and industrious private sector. In 2005, the country realized a record US $ 10 billion in direct FDI that accounted for 34% of the total foreign capital flow into the country (UAE Interact 76). The UAE is also an oasis of inward investment in the Arab World due to the fact that it is the leading country in the region in terms of the attractiveness to inward investment.
The UAE considers the private sector comprising of both local and foreign investment to be the primary engine behind its sustained growth. FDI has also transformed the nation into an oasis of knowledge in the region following the influx of many foreign investors that have substantial. expertise in the various development areas. Foreign investors have played a significant role in transferring knowledge and expertise in professional areas that do not fall within the core competencies of the country (Ravens 137).
FDI has also created new market opportunities by creating employment and establishing new business networks in the high value-added and knowledge intensive sectors.