2014 Index of Economic Freedom

United Arab Emirates

overall score71.4
world rank28
Rule of Law

Property Rights55.0

Freedom From Corruption66.4

Limited Government

Government Spending83.1

Fiscal Freedom99.6

Regulatory Efficiency

Business Freedom74.4

Labor Freedom82.9

Monetary Freedom84.6

Open Markets

Trade Freedom82.5

Investment Freedom35.0

Financial Freedom50.0

Embed This Data

Create a Comparison Chart

See how United Arab Emirates compares to another country using any of the measures in the Index.

vs
Close
Download PDF
Quick Facts
  • Population:
    • 5.5 million
  • GDP (PPP):
    • $271.3 billion
    • 3.9% growth
    • 2.1% 5-year compound annual growth
    • $49,012 per capita
  • Unemployment:
    • 2.4%
  • Inflation (CPI):
    • 0.7%
  • FDI Inflow:
    • $9.6 billion
Embed This Data

The United Arab Emirates’ economic freedom score is 71.4, making its economy the 28th freest in the 2014 Index. Its score is 0.3 point higher than last year, with improvements in labor freedom, business freedom, and monetary freedom outweighing declines in the control of government spending and freedom from corruption. The UAE is ranked 2nd out of 15 countries in the Middle East/North Africa region, and its overall score is higher than the world and regional averages.

The UAE was first assessed in the 1996 Index and since then has been a regional leader in economic freedom. Improvements in half of the 10 economic freedoms include advancements in the management of public spending and market openness. Significant declines in property rights and freedom from corruption have prevented an overall gain, but the economy has achieved its highest economic freedom score in a decade in the 2014 Index.

The UAE can do better in the rule of law. Respect for the rule of law remains undermined by the judicial system’s lack of independence and vulnerability to political influence.

Close

Background

The United Arab Emirates is a federation of seven monarchies: Abu Dhabi, Ajman, Dubai, Fujairah, Ras Al-Khaimah, Sharjah, and Umm al-Qaiwain. The government responded to demands for reform during the “Arab Spring” by initiating a $1.6 billion program to improve the infrastructure in the poorer northern emirates. It also expanded the number of people allowed to vote in the September 2011 elections for the Federal National Council. Abu Dhabi accounts for about 90 percent of oil production; Dubai is the center of finance, commerce, transportation, and tourism. Free trade zones that permit 100 percent foreign ownership with zero taxation help to diversify the economy. UAE nationals rely heavily on public-sector employment and subsidized services. Oil and gas exports account for roughly 80 percent of government revenues.

Rule of LawView Methodology

Property Rights 55.0 Create a Graph using this measurement

Freedom From Corruption 66.4 Create a Graph using this measurement

The UAE is considered one of the least corrupt countries in the Middle East. The rule of law is relatively well-maintained, but the judiciary is not independent, and court rulings are subject to review by the political leadership. All land in Abu Dhabi, largest of the seven emirates, is government-owned. Non-citizens are allowed to own property only in certain areas.

Limited GovernmentView Methodology

The UAE has no income tax and no federal-level corporate tax. In some emirates, different corporate taxes exist for certain business activities. There are few other taxes, and the overall tax burden is quite low at 6.1 percent of the economy. Government spending is 24 percent of gross domestic output. Public debt is low at about 18 percent of GDP. Oil and gas revenues contribute significantly to public spending.

Regulatory EfficiencyView Methodology

Launching a business takes six procedures and eight days, and no minimum capital is required. Licensing requirements have been streamlined and are less costly, but completing them still takes over a month. Employment regulations are relatively flexible, and the non-salary cost of employing a worker is moderate. Continued restructuring of heavily subsidized and indebted government-related entities (GREs) is needed.

Open MarketsView Methodology

The UAE’s average tariff rate is 3.7 percent. Non-tariff barriers are not a significant deterrent to trade. Foreign ownership in many sectors of the economy is capped at 49 percent. The modern financial sector is efficient and competitive. Banks offer a full range of services. Islamic banking is increasingly prominent. State-owned banks have maintained a strong presence, but foreign banks have over 100 branches around the country.

Country's Score Over Time

Bar Graph of United Arab Emirates Economic Freedom Scores Over a Time Period

Country Comparisons

Bar Graphs comparing United Arab Emirates to other economic country groups

Regional Ranking

rank country overall change
1Bahrain75.1-0.4
2United Arab Emirates71.40.3
3Qatar71.2-0.1
4Jordan69.2-1.2
5Israel68.41.5
6Oman67.4-0.7
7Kuwait62.3-0.8
8Saudi Arabia62.21.6
9Lebanon59.4-0.1
10Morocco58.3-1.3
11Tunisia57.30.3
12Yemen55.5-0.4
13Egypt52.9-1.9
14Algeria50.81.2
15Iran40.3-2.9


View all countries ›

Back to Top