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Proter’s Diamond Theory of Trade in UAE
Introduction
In international trade, comparative advantage is one of the aspects that a country might have the advantage of inheriting endowment factors such as land, labor, natural resources, and the population. UAE is a nation in the Middle-East with a GDP of approximately $ 377 billion. It is one the second in ranking, and the biggest in term of economy is the Arab region following Saudi Arabia. It has increased and tripled since 2013. The economy of the nation squarely depends on oil and natural gas and has diversified to real-estate as well as the tourism business. It has a high population with the largest number of human personnel (Marchon, & Toledo, 2014).
The research paper is going to carry out analysis of UAE’s condition in relation to Porter’s Diamond Theory. According to Porter, a country can be in a position to develop other factors of endowment like skills, technology, and support from the government, culture, and knowledge. The diamond structure employed by Porter illustrates the determinants of a country’s advantage representing a nation’s strategies for the establishment of the industries.
UAE Porter Diamond
Factor Conditions
UAE’s administration has been set on developing transportation and embracing trade. Although the oil was established in UAE in the 1970’s Sheiks of the region affirmed to carry on the path on of making the region a business capital in Middle-East. Nevertheless, lately this determination for advancing business and transport system has been targeted more to the building (via administration contracts) of tourism terminuses, displays, as well as tourist fascinations sites and venturing in real-estate. Furthermore, the city arranges one of the most important events in the globe like Dubai shopping anniversary, Dubai-World-cup, and Dubai-Tennis competitions.
Additionally, UAE’s promising business approach has fetched international corporations that are capitalizing in available business opportunity in UAE (Fundeanu, & Badele, 2014). The position makes and the perfect target. Positioned at a cross-road of Africa, Europe, and Asia, Europe, signifies a gate-way to these great and fast-rising markets. Finally, although it is thought that UAE does not have an adequately decent education structure to bring the number and excellence of the labor force desirable. UAE has responded to the standing since the administration is seriously capitalizing in educational developments like the Dubai’s information village. Also, the greater salaries remunerated attract immigrant workforces to accomplish UAE’s work-force (Harzing, & Giroud, 2014).
Demand conditions
When one looks at the tourism sector in UAE, the requirement for travel particularly in UAE-Dubai has numerous opportunities to explore. First the physical nearness to Saudi-Arabia with a populace of approximately twenty-five millions of populations generates massive group of tourist that visit Dubai. Secondly is the Muslim religion that fascinates many people from varied parts of the planet especially Europe and America. Moreover, the central hub of UAE in the Middle-East is an attraction point. It attracts expatriates from bigger organizations to come invest and as well visit the many attracting sceneries in UAE. Research establishes that UAE demand continue to grow and is given that in the year 2010 and 2012 the increase was 15%. It is approximated that by 2025, a forecast of 10% increase is anticipated in tourism alone. It points out that the possibility of getting increase in other sectors of investments is probable (Verbeke, & Hillemann, 2013).
Related and supporting industries
The government of UAE supports creation of economic and social support for all industries. It is to aid the increasing demand. In order to achieve this, the government invests in transport networks, infrastructure, and manufacturing industries. It is one of the strategies by the government that all sectors of the economy get supported. It is the economy that is going to move through all sections set properly. The tallest building in the world emanated from UAE and gets realized through the support from the government (Harzing, & Giroud, 2014).
Firm Strategy, Structure, and Rivalry
UAE’ strategy of attracting investors is via use of minimal business regulations. Trade barriers, foreign-exchange controls as well as quotas. The government of UAE permits repatriation of profits and capital. The exchange rate is stable between the US dollar and UAE dirham. Additionally, the structures such as infrastructure and health-services make the country a nation that has the structures for a healthy business. All these create a business atmosphere that is open for business. It is a free-open environment that poses attracts foreign investors and hence generating business rival (Verbeke, & Hillemann, 2013).
In conclusion, the country of UAE is well established for international business since there is provision of a conducive environment for business.
References
Fundeanu, D. D., & Badele, C. S. (2014). The Impact of Regional Innovative Clusters on
Competitiveness. Procedia-Social and Behavioral Sciences, 124, 405-414.
Harzing, A. W., & Giroud, A. (2014). The competitive advantage of nations: An application to
academia. Journal of Informetrics, 8(1), 29-42.
Verbeke, A., & Hillemann, J. (2013). Internalization theory as the general theory of international
strategic management: Jean-François Hennart’s contributions.Advances in International Management, 26, 35-52.
Marchon, C., & Toledo, H. (2014). Re-thinking employment quotas in the UAE.The
International Journal of Human Resource Management, 25(16), 2253-2274
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