From diversification resistance to sustainable diversification: lessons from the UAE's public policy shift

Abstract

This paper critically analyses major shifts in the UAE's public and economic policy, particularly examining the transition from oil dependency to diversification and then to sustainability and resilience. It aims to provide insight into the facilitators, inhibitors and future of sustainable development in the UAE. The paper reviews evidence on diversification resistance, the resource trap and sustainable development, and draws attention to the dynamics of policy reform in the UAE, especially after the COVID-19 pandemic. The findings of this study indicate that not all patterns of diversification result in sustainable development and resilient economies. The evidence also suggests that achieving sustainable and resilient growth does not necessarily come at the cost of economic prosperity. After decades of extraordinary diversification, the UAE's economic policy has undergone a paradigm shift. Years of fluctuating oil revenues, increasingly globalised markets, environmental obligations and significant recent structural changes in energy markets have paved the way for a new emphasis on sustainable diversification and economic resilience. The paper provides novel insight on the UAE's transition to a sustainable and resilient economy and contributes to the current public policy debate about the future of economic policies in the UAE on sustainable diversification initiatives and the trade-offs that emerge from embracing sustainable diversification and economic resilience goals.