NAFL 8th DRAFT

News & Updates
NAFL REVIEW
Export-orientation policy drives economic
transformation: DEC study
Export-orientation has been credited as a
successful development strategy leading to
economic transformation while sustained
export-oriented policies have been
associated with significant export
diversification, according to a working
paper on productivity of exporting firms in
Dubai in two economic zones, Dubai main
and free zones.
The paper also described how countries,
which initially remained confined to
exploiting the natural resources they were
endowed with, sought to avoid abrupt
sector-specific shocks by shifting towards
manufacturing. The export of manufactured
products was seen as non-traditional
export.
In fact, non-traditional exports are
characterized by higher income elasticity,
less volatile terms of trade, and higher
prospects of dynamic productivity gains,
said the paper prepared by the Economic
Policy & Research Center (EPRC), the
operational arm of Dubai Economic Council
(DEC).
Dubai has recently launched a far-reaching
development plan (the Dubai 2021
Development Plan). Among other things,
this plan is aimed at enhancing high
productivity through the promotion of the
'light manufacturing sector'. The received
wisdom about the role of manufacturing,
especially manufacturing exports, in
economic development should augur well
for this strategic objective of the Dubai
Trade promotion agencies bring substantial
returns, in terms of diversifying exports and
opening up export markets, as well as in
country branding and economic growth, says
a report published by the International Trade
Centre (ITC), a joint affiliate of the World Trade
Organisation (WTO) and the United Nations.
According to the report, every one dollar
spent on export promotion generates US$87
worth of additional exports and a $384
increase in gross domestic product (GDP).
ITC, a joint initiative of the WTO and the United
Nations Conference on Trade and
Development (UNCTAD), found in its research
that trade promotion organizations
contribute to a 5-6 percent rise in GDP per
capita and a 7-8 percent rise in exports,
development plan.
A more prominent role for manufacturing,
therefore, should entail higher productivity
growth and, hence, more stable and
sustainable growth. This has rightly been
the main policy concern for Dubai in view of
the increasingly volatile global economy,
which has substantially impacted the highly
open and largely service-oriented economy
of the Emirate. Moreover, though the
massive factor accumulation and superb
business environment have been enough to
allow Dubai to achieve one of the most
phenomenal economic transformations in
recent history, there is a wide consensus
that this growth model might have now
reached the point of diminishing returns.
Based on phone interviews with managers
or senior staff in 982 firms, the Dubai
enterprise level survey was designed to
cover a representative sample based on
eight industrial sectors (i.e. construction,
financial services, hotels and restaurants,
non-financial and social services, retail
trade, wholesale trade, transport, storage
and communication and manufacturing),
and two zones (i.e., Dubai main and Dubai
free zones).
Firms in FZs had a higher share of foreign
investment compared to their DM
counterparts with about 26 percent in the
FZs and 4.4 percent in DM. However, nonexporting
firms in FZs are attracting more
foreign investments relative to their
exporting counterparts in FZs (27.6 percent
through varied services covering financial
assistance, market intelligence, product
certification assistance, and in facilitating
participation in trade promotion events.
Commenting on the report, Sami Al Qamzi,
the Director-General of the Department of
Economic Development (DED) in Dubai, said
the emirate is uniquely placed to benefit from
sustained focus in trade and export
promotion.
"Dubai continues to evolve into a strategic
manufacturing, export and re-export hub.
The more that local firms realise their export
potential, and the more Dubai communicates
its advantages as a source market for diverse
products overseas, the more the outwardlooking
growth strategy of Dubai and the UAE
and 14.6 percent, respectively).
Firms in FZ are more capital intensive than
their DM counterparts (AED50,000 of
capital per worker in FZ against AED30,000
in the case of DM). Moreover, non-exporting
firms in FZ have more capital intensity than
exporting FZ firms, with AED56,500 per
worker in the former and AED37,500 per
worker in the latter).
According to the policy recommendations,
the focus of the 'light industry' initiative of
the Dubai 2021 Plan should target
enhancing productivity, since these
manufacturing firms are likely to be less
productive than other firms. In view of the
dominance of SMEs in the manufacturing
sector, the agenda for promoting 'light
manufacturing' should also be driven by
those related to the promotion of SMEs,
such as better access to finance and
registry of assets.
Global study underlines role of trade promotion
bodies in GDP growth
will have its desired results, including a
favourable balance of trade," Al Qamzi said.
Saed Al Awadhi, the CEO of Dubai Exports, the
export promotion agency of the DED, said the
role of trade promotion organisations in
driving growth has become more important
as the global trade environment becomes
more dynamic and volatile.
The top 10 markets for Dubai Exports in 2015
were India, Saudi Arabia, Iran, Oman,
Singapore, Bahrain, USA, Turkey, Kuwait, and
Iraq.In 2016, the focus is on further
diversifying exports from Dubai to 15
countries, including China, India, Russia,
Saudi Arabia, Qatar, Egypt, France, Hong
Kong, Vietnam, Nigeria, Rwanda, Brazil,
Paraguay, Azerbaijan and Uzbekistan, Al
Awadhi said.
15 / Sep-Oct 2016