Comparison between UAE economy and USA economy

done by

ahmad mohammed noor janahi
s200306271

Low unemployment

The United Arab Emirates scores highly in terms of joblessness because it has one of the lowest unemployment rates in the world. As of 2011, the country’s unemployment rate stood at 2.4%, which makes it the 20^th most successful in terms of this parameter (CIA 2012a). This partly stems from the country’s immense investment in economic projects as well as the priority it gives locals when applying for jobs (Mellahi 2007).  Conversely, the USA has a high unemployment rate. It now stands at 9.1%, which makes it the 104^th country in the world. The US’s high unemployment rate stems from the 2008 economic depression. It is yet to recover from the effects, and one of the most obvious manifestations of such a problem is the lack of jobs.

Stable prices

Prices are moderately stable in both countries. As of 2011, the USA’s inflation rate stood at 3%, and this was an increase of 1.4% from the previous year. The country is 52^nd in terms of stability of prices. Similarly, the UAE had an inflation rate of 2.5% in 2011, which was an increase of 1.4% from the previous year. Consequently, the UAE is 33^rd in the world in terms of stability of prices. It is likely that this moderate performance may stem from the UAE’s move to other sectors of the economy that do not rely on natural resources. Also, since there is a high representation of foreign nationals in this country, most of them create foreign exchange fluctuations. Furthermore, fast, economic growth rates almost always come with changes in prices goods.

Economic growth

The economy of the United Arab Emirates grew by 3.3% in 2011, and this placed it at position 118^th in terms of growth (CIA 2012a). Conversely, the US’s economy only grew by 1.5% in 2011. It should be noted that, in the previous year, the US had grown by 3%, so this was a drop in performance. The US is 171^st in the world with regard to this parameter. The UAE’s economy has grown rapidly because of its leaders’ investments in construction and manufacturing (Forstenlechner 2010). The former industry has led to a boom in the UAE. On the other hand, the US’s growth rates have been poor because issues that emanate from the 2008 depression are still ailing the nation. Furthermore, competition from emerging economies, which produce the commodities the US used to specialise in, are causing the country to perform poorly (Pope 2012.

Balance of Trade

The balance of trade is also another factor that sets these two countries’ economies apart. The UAE has a strong and positive balance of trade. It currently stands at $38.45 billion. This makes it the 15^th most successful country in the world. On the flipside, the United States has a weak balance of trade, which stands at -$599.9 billion (CIA 2012b). This places it at position 198^th in world rankings. The poor rankings emanate from the USA’s high amount of foreign-owed debt. Additionally, the country’s rankings as an investment destination have gone down. Costs of production are high, and this leads to the proliferation of commodities from cheaper economies. Conversely, the UAE has maintained a strong balance of trade owing to its investment in local businesses. Most of them export their commodities and thus maintain the country’s impressive performance.

References

CIA 2012a, United Arab Emirates economy 2012, viewed 13 November 2012, ‹http://www.theodora.com/wfbcurrent/united_arab_emirates/united_arab_emirates_economy.html›

CIA 2012b, United States economy 2012, viewed 13 November 2012, ‹http://www.theodora.com/wfbcurrent/united_states/united_states_economy.html›

Forstenlechner, I 2010, ‘Workforce localization in emerging Gulf economies: The need to fine-tune HRM’, Personnel Review, vol. 39 no. 1, pp. 135-152.

Mellahi, K 2007, ‘The effect of regulations on HRM: private sector firms in Saudi Arabia’, International Journal of Human Resource Management, vol. 18 no. 1, pp. 85-99.

Pope, C 2012, ‘America's dirty war against manufacturing’, Bloomberg, 20 January, p. 15.