Research Paper on Abu Dhabi: Multi-Dimensional Environmental Challenges

Introduction

The domain of Abu Dhabi's general environment is multidimensional. First, air pollution is a significant problem courtesy of the numerous industries from the various sectors of the economy. Likewise, waste generation, land degradation, and desertification remain issues of fundamental concern because they are exacerbated by industrial development. The country faces high population growth whose net effect is water scarcity due to extremely high demand. Even so, the country has a vibrant record regarding the efficient establishment of institutions responsible for academic, transport, trade, legal, and governance affairs. Each of the institutions is efficiently-run and independently operates to facilitate optimum deliverance of the services with which they are expected to deliver.

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Political, Economic, and Legal Systems

Political stability prevails in the Abu Dhabi courtesy of efficient leadership frameworks. The country does not witness civil feuds and rebellion among the different communities occupying it. The net effect is reflected in economic systems in which the country's economic activities smoothly run. Abu Dhabi's legal system is a composition of civil and Islamic laws. The application of both Islamic and civil laws is contextualized.

Political Climate and Direction

Abu Dhabi's political landscape is quite peaceful as the nation is primarily governed by religious rules. There are no political parties, and political leadership is utterly banned. Technically, religious leaders are Abi Dhabi's flag bearers, and as such, they command the nation in place of the political elite.

Analysis of Trade and Economy

The Direction of the Economy and State Growth

Traditionally, Middle East countries, especially Abu Dhabi, relied on oil and its by-products as the primary economic resource. However, the trend is quickly fading away due to economic changes and dynamics. At the time in which oil was a golden resource, the region's growth was tremendous, and this was evidenced by Abu Dhabi's economic boom, massive investments, as well as infrastructural development in the region. Even so, economic patterns have changed in the recent past, and excellent examples include increased expenditure, meager oil prices at the global market, and, lastly, low economic growth. To this end, Abu Dhabi is undoubtedly vulnerable to any economic crisis, especially those that infringe oil business, and as such, deliberate attempts to strengthen fiscal institutions is the new development and the direction to which such nations should consider. A typical reason why Abu Dhabi should consider strengthening its financial systems and institutions is that it will offer prophylaxis against the shocking oil prices in the world market. Such prophylaxis insulates the country against oil price volatility, and hence profitability. Since 2004, president Sheikh Khalifa bin Zayed al-Nahyan has helped opening up UAE's economy for foreign companies like Tesla. The consequence of establishing a free market is high per capita that improved quality of life and low economic restriction (https://www.heritage.org/index/country/unitedarabemirates). Technological advancement is another direction. Tesla, for instance, is favored, and so, it is projected that the country's demand for electric cars will increase at a CAGR of at least 32.1% between 2019 to 2025. The estimation has encouraged Tesla to invest in the country, and as such, it creates competition in the motor industry.

Taxation and Regulations

The country has neither income nor corporate tax. In 2017, it was estimated that Abu Dhabi's tax stood at 28.8% of its Gross Domestic Product. Also, the country levied a variety of taxes in which the tax levied on a particular business depends on the type of economic activity carried out. Value Added Tax (VAT), which was recently introduced. Earlier in 2015, Abu Dhabi introduced excise duties on the newly-introduced goods meant to diversify its economy. The excise duties meant that the state would collect 50% of the sweetened carbonated drinks and another 100% on tobacco and energy drinks. A 5% tax is collected to enhance the quality of public services. While the overall tax burden stands at 8.9%, the government spends 32.3% of the GDP, and this leaves a budget deficit of 2.6%. With no GAAP principles, Abu Dhabi levies 5% tax on the CIF value and insurance of imports. Again, its tariff is 5% on all the goods traded in which 5% VAT is applied on vehicles. Unlike in America where there is a central tax collection agency, Abu Dhabi's businesspersons collect taxes at the various respective levels where they operate. Again, the essence of low taxation encourages business ownership, and when accompanied by foreign investment policies and regulations, foreign investors are motivated to invest in Abu Dhabi.

As with regulation, Abu Dhabi's economic structures focuses on the mainstream economic factors and stretches to other essential aspects of life. For instance, Abu Dhabi has established laws and regulatory requirements bracing businesses for environmental protection. Standard Operating Procedures (SOP) is an excellent example of a regulatory measure established to ensure environmental protection, and to supplement it, Abu Dhabi has a set of rules and procedures of ensuring that business and economic activities maintain a healthy environment through strategies like waste treatment. Reduced economic regulation and free markets have attracted foreign investments. The establishment of Tesla showrooms in the country is a typical example that accounts for the registration of an all-time high GDP of $686.8 billion in 2018. A 2.5% economic growth is expected in the coming years, and this is based on significant tariffs in which 2.8% is applied to both import and export, which equals 172.8% UAE's GDP. Lastly, the regulations are utterly favorable for employment in which it is utterly flexible. Employed people are the least taxed in Abu Dhabi, as shown in the link below.

Trade, Partners, Extent, and Main Industries

The picture below indicates UAE's export trade statistics in which it exported oil products and other raw materials such as silver and gold. While its 2017's exports stood at $142 billion, imports were valued at $175, and this left the country with a $34 billion trade deficit. The Dirham significantly flew into foreign markets, and internally, it left a GDP of $382 billion with a $73.9k per capita.

Abu Dhabi is a member of the Gulf Cooperation Council, and as such, its primary partners are the six members of the council. However, there are also other countries to whom Abu Dhabi channel its exports. They include India, Japan, China, Oman, and Switzerland, and the export values stand at $22.1 billion, $18.8 billion, $11.4 billion, $10.1 billion, and $10 billion for the respective countries. Abu Dhabi's exports are heterogeneous because various industries are involved. The major industries involved in the export trade include petrochemicals and petroleum, cement, aluminum, fertilizer, textiles, commercial ship repairs, handcrafts, and industries developing construction materials.

National Advantage and Strengths

Dirham, UAE's currency, is a significant strength because it has 0% volatility, and it is usually pegged on the American dollar. Therefore, it reduces the risks associated with its use in which companies like Tesla would not need to hedge it. GCC remains the UAE's fundamental trading agreement since 2002. It enables the country to cut customs and tariffs as it operates within the region. The "Greater Arab Free Trade Agreement" is another fundamental trade agreement because it enhances economic ties with Morocco, Lebanon, Syria, Iraq, and Jordan. Also, Abu Dhabi is affiliated to World Trade Organization, which joined in 1996. This is to enhance trade with the global community.

Cooperation, Agreements of Trade, and Regional Incorporation

Analysis of Formal Organizations

Abu Dhabi partners with the various country through trade agreements such as GCC, TIFA, FTA, and WTO. The FTA negotiated Tesla entry into Abu Dhabi, and UAE will remain Tesla's market due to low taxes and fuel costs, low import tariffs, and high per capita which implies high disposable income even though the FDI entry mode remains a fundamental challenge. Even so, Prime Minister Sheikh Mohammed Bin Rashid Al Maktoum reiterates that favorable business ownership attracts and retains foreign investors. The trade agreements serve different purposes. TIFA, for instance, legally protect foreign investors, enhances transparency in the taxation and regulatory procedures, and ensures efficient property protection within the country. TIFA's negotiation begun in 2005 and will continue to enhance trade aspects between America and the UAE. Also, infrastructural agencies are involved in spearheading Abu Dhabi's economic growth. For instance, Dubai Electric and Water Authority (DEWA), alongside the Road Transport Authority (RTA) have collaborated to enhance the development of the motor vehicle industry in the country, and this is a motivating factor for companies like Tesla. It encourages them to invest more in the country.

Business Practices and Business Etiquette

While business practices and etiquette in Abu Dhabi adhere to the convicts of Islamic laws, especially Sharia's Halal requirements, American business practices, and etiquette are utterly free for different cultures to practice whatever they deem fit.

Ethics

While Abu Dhabi embraces masculine values than their female counterparts, a converse is witnessed in America. America values both females and males at equal measures, and this is contrary to the somewhat gender-based bias and preference in Abu Dhabi. Unlike America, nepotism and corruption are less in Abu Dhabi, and this makes busine...