Few people in the West know how many emirates there are in the United Arab Emirates, let alone what their names are. In fact, the country is a federation of seven emirates or sheikdoms: Abu Dhabi, Ajman, Dubai, Fujairah, Ras Al- Khaimah, Sharjah and Umm Al- Qaiwain. The UAE has a population of 2.8 million, and a land area of 83,600 square kilometres. Interesting for geographers, but let’s cut to the chase.

The UAE is reckoned to hold one-fifth of the world’s known oil reserves – enough to last for 100 years at current rates of production. Most of the oil lies below the sands of Abu Dhabi, which rating agency Moody’s describes as the driver of the UAE economy.

Even though there has been some diversification, in 2004 oil and gas still directly accounted for 33% of GDP, 77% of consolidated government revenue, and 92% of exports (excluding re-exports and free zone exports).

In the light of last year’s hikes in oil prices, GDP is expected to have grown by 25% in 2005 as against almost 18% for the previous year. In revenue terms, it’s boom time in the UAE.

Within the UAE, Dubai boasts the most stunning economic development story in the Persian Gulf, the Middle East as a whole, and quite possibly the world. It is the fastest growing city on the planet. The value of current construction projects under way could be as much as $100bn (£57.5bn).

Dubai’s response to the dwindling of its oil wealth (relative to that of Abu Dhabi, for example) has been to diversify into other sectors – on a massive scale. Its port facilities, already among the largest in the world, have grown rapidly. The vision is for Dubai – positioned as it is between Asia, Africa, Europe and the Middle East – to become the world’s shipping hub. The emirate’s tourism sector has also leapt ahead, attracting a spectrum of visitors from families to golfers and the super-rich.

Political and regulatory environment

Although the UAE is generally more liberal and open than neighbouring Saudi Arabia in its acceptance of western investment, values and practice, there are still drawbacks. The UAE capital, Abu Dhabi, for example, only opened up its property market to outside investors last year.

The UAE is keen to be seen as all round business friendly. The World Economic Forum puts it at number 18 for growth competitiveness in a list of 117 countries, just below Germany, New Zealand and Korea. In the World Bank’s ease of doing business ranking, it is 69th of 155 countries, and on the Corruption Perceptions Index it ranks number 30 among 158 countries.

Doing business there

Many companies choose to set up in Dubai’s free zones, such as the Internet and Media Cities. This can be relatively quick: it takes around two months to apply for permission to set up, get local government approval for the business plan and a licence to operate.

Practically speaking, this means using the government services office in the free zone, which deals with all the government departments to obtain approvals. It is efficient, although licences and permits can cost several thousand pounds.

The alternative is to set up as an onshore company. In this case, foreign nationals may own only 49% of the company, with 51% owned by a local partner. Such partnerships can be difficult to unwind if the arrangement doesn’t work out.

Management/accountancy staff

Professional and managerial staff are typically expatriates, many of them from the UK, although headhunters and recruiters are also busy trying to move people between companies within the UAE or from elsewhere in the Gulf, such as Kuwait and Bahrain.

“Finding staff here with the right skills is well-nigh impossible,” says Matthew Ranson, a committee member of the Dubai-based British Business Group. “There are some good local people, many of whom have been educated at overseas universities and business schools, but more often than not it is a matter of bringing in expatriates.”

Ranson adds that the development of Dubai International Financial Centre has exerted extra demand for staff to work at financial services companies setting up at the centre.

Making a success of business

Despite appearing to have adopted the American model of runaway capitalism and economic development, religious, ethical and family values are important in Dubai.

While Dubai may be liberal and open for business, it does not tolerate some behaviour. In this regard, though, it is more comparable to Singapore than Qatar or Saudi Arabia, say.

It is important to dress presentably in the UAE and show respect for the fact it is a Muslim country where prayer five times a day is common, which may dictate the way diaries are organised.

The more traditional local men may consider it inappropriate to shake hands with a woman. In the new industries such as media and design, things are more informal, and suits and ties have given way to jeans and sweatshirts. This is not the case in banks, government departments and other formal situations.

Case study: Sand hassle

Inflows and outflows