The UAE vs the Chinese Economy - Case Study Example

Name: Instructor: Course: Date: The UAE Vs the Chinese Economy Introduction The UAE takes the second position in the list of the largest economies in the Arab world. Its lead attributes to the diversification of its investments in both oil and non-oil sectors. Before attainment of independence, the individual emirates had total control over its economy but that later changed allowing the national government overall control. China’s economy has experienced rapid growth over the past three decades due to the high rate of industrialization in the country. Its manufacturing industry makes china the largest manufacturing economy globally. These two economies have several similarities and differences whose analysis helps in the understanding of both economies. Size of the Economy The UAE has one of the largest economies in the Arab world. Its gross domestic product ranges at $377 billion in 2012. Oil generates almost a third of the overall GDP while the non-oil resources contribute to around 70%of the GDP. Since the acquisition of independence, the economy has multiplied at 231 times and expects a further growth in future. The major natural resources of the country consist of natural gas and petroleum resources. Over 90% of the resources emerge from the emirate of Abu Dhabi and the nation faces a major deficiency of natural fresh water due to high salinity levels. China on the other hand has the world’s second largest economy with a growth rate of about 10% over the past three decades. The country records the world’s highest export quantity from its manufacturing industry and the second world importer (Naughton, 140). The country plays a major role in the international trade. It has engaged in major trading organizations and treaties with other nations. China relies on natural gas, oil, nuclear power, and energy production through exploitation of its coal reserves. Societal Indicators The unemployment rate ranges at 4.2% in the United Arab Emirates while china registered a rate of 4.1% in 2012. The gross domestic product (GDP) per capita in 2013 registered at $3583.38 in china and $24077.73 in the United Arab Emirates. The GDP per capita in the UAE was equivalent to 191% of the world’s average while china is composed of 28% of the world’s average (Knight,49). The unemployment rate in china relates to the low youth population and the rising aged population. The youth migrate to other nations to increase the chances of economic improvements. The remaining ageing population become unproductive and can therefore not handle jobs in the manufacturing industry. The UAE recorded a population of 9.35 Million while china had 1361 Million in 2013. This explains the reason for the disparity in the GDP per capita. China’s high population reduces its per capita income hence raising the poverty level in the country. China’s geographical size is 3.705 million sq miles (9.597 million km²) while the size of the UAE covers an area of 32,278 sq miles (83,600 km²) (International Monetary Fund, 60). China has a smaller square coverage with a large population and hence densely populated. UAE on the other hand has wider area coverage with a smaller population size hence a sparsely populated nation. However, the sparse population in UAE however does not translate into equality in resource allocation since other factors intervene to influence resource allocation. The UAE exports1390630 AED Million and imports 886936 AED Million with its main source of income being the gold reserves as well as crude oil production. Its inflation rate ranged at 3.1% in 2013 ²) (International Monetary Fund, 65). China’s exports range at 1964 USD hundred Million while its imports range at 1376 USD hundred Million with an inflation rate of 0.8%. China also sources its income majorly from its gold reserves, crude oil production, as well as tourism. Political Indicators The UAE operates a federal form of government where the national government delegates power to the individual state governments. Each state has a ruler that oversees the governing of the individual state through the Sharia law since they follow the Islamic regulations. China on the other hand is a one party state with centralized governance. It operates a communist system of government with communal ownership of the means of production. The country has however adopted the capitalist system where the entrepreneurial class has emerged and dominated the nation’s economy. Ethical Indicators China faces environmental problems where 1.3 million people die due to pollution. The high rate of industrialization seems to have negative implication on the people due to the densely populated settlements. High levels of corruption especially in the health industry have affected the business operations since the locals interpret bribery as a normal business operation. The country takes the lead in production of counterfeit goods, which has largely affected the authenticity of its exports especially in the luxury goods market. The country’s exports are also associated with dumping of commodities produced at a low cost to developing nations. The UAE also faces major incidences of corruption with the bourgeoisies accumulating more wealth while the proletariats facing deterioration working conditions. Tax evasion is another issue facing the UAE due to the absence of an elaborate taxation policy. Capitalism/Democracy Economic growth has influenced capitalism in the communist country of china. The citizens have embraced the ideology of private ownership of property. This emerges in conducting business where the people have ventured in private corporations and used the profits to acquire property. The spirit of individualism has continued to encroach on the population and instead of encouraging democracy; it resulted in the formation of social classes. The rich entrepreneurs in the country have extremely busy schedules and have no time to push for democracy since the current system favors them. A rich authoritarian political party emerged and adopted some dictatorship qualities through jailing of critics. The economic growth of china has made the country more self reliant and less dependent on the United States for aid. In the UAE, economic growth has strengthened the capitalism in the nation. This has clearly defined the social classes due to the high inequality in distribution of income. The high class continues to accumulate more wealth than the poor do and negatively influences democracy and has clouded the democratic reforms. The establishment of stronger roots of capitalism has led to the oppression of the working class by the investors hence the continuous riots by the workers. The ruling family denies the immigrant workers freedom of expression, basic human rights, as well as the political involvement in voting and decision-making. The development projects in the nation face a lot of interruption due to the protests of workers for poor wage rates. Internet Effects The internet facilitates the interaction of people across nations through which people exchange ideas. This increases the exchange of information between nations hence facilitating economic growth. Technology largely describes the Chinese economy since it holds a leading position in the technology industry. The curriculum of the country encourages the learning of the global technology trends (Tkacheva, 94). Students learn to improve technological products, and then export the resulting products to developing nations. The internet has widened the ideas of the innovators to develop extraordinary products. The internet has also promoted the merchandising culture of the Chinese people through providing them with more business opportunities. It also connects the suppliers with the buyers of products such as engineering services in developing nations. The United Arab Emirates uses the internet to promote its trade. The UAE plays a major role in the international trade for retail commodities. Electronic payments facilitate this trade between the trading partners without physical interaction. The internet has widened the market for its commodities globally. However, the internet has largely contributed to ethical issues due to the corruption of morals of the country’s population. The internet has also promoted the tourism industry through advertisement of its attraction sites as well as its retail products. Approach to Capitalism The Chinese political system has undergone major transformation over the last three decades. The communist nation has aggressively embraced capitalism. The private sector currently comprises of 30 million private investors employing over 200 million employees (Tsai, 72). The private sector also accounts for approximately half of the country’s GDP. The country has transformed from a system of public ownership to private ownership of property. The privatization of the housing sector, the education, and employment of the country continuously weakened the control. The quick transition stirred turbulence in the nation characterized by riots and demonstrations. The middle class largely dominates the nation currently. The UAE on the other hand has operated a capitalist government system since the acquisition of freedom from the united stated of America. A system of social classes dominates the social structure and the distinction of the classes grows with time. The bourgeoisies continuously accumulate wealth and the proletariats keep pushing for a raise in their payments and the improvement of working conditions. The personal wealth of Sheikh Khalifa amounts to 15 billion dollars. A few members of the ruling family own the wealth created by the immigrants’ workers in the nation. There exists a large disparity of wealth between the rulers and the general population. Economic Growth/ Personal Freedom There exists a relationship between the economic growth and personal freedom. Economic growth leads to increased production of commodities. High productivity hence leads to a high number of commodities for the consumers to choose. China has realized a rise in urbanization as well as industrialization. The growth if industries in the country have offered the citizens an opportunity to exercise their freedom of choice. The purchase choice provides a form of freedom for the citizens. This leads them to a desire of freedom in the political system. The political freedom also leads to economic freedom in the country. Political freedom offers the citizens an enabling environment for them to come up with innovative business ideas without the interference of the government. In the UAE, the working population acquires minimal political freedom through the infringement of basic human rights (Lane, 74). This provides a harsh working environment for the worker hence minimizing their productivity. Economic growth enables the workers increase their income level hence become more independent. The rise in income of the members of the low social class leads to the upgrade into the middle class. The ruling family hence aims at infringing the political freedom of its citizens to control their economic freedom and vice versa. Conclusion The UAE and China’s economy have proved relevant to the international market. Both economies possess various similarities that place them with the top players in the market. The utilization of their resources offers them competitive advantage. Their political structures lean towards capitalism due to the increasing entrepreneurial spirit in both nations. Their differences emerge due to the political systems as well as the social structures. These differences however do not rule any of the countries as main competitors in the global market. Their economies illustrate constant growth rate and the market trends project an upward trend in income hence high level of GDP. Work cited: Knight, John B, and Sai Ding. China's Remarkable Economic Growth. Oxford: Oxford University Press, 2012. Print. Lane, Jan-Erik. Globalization: The Juggernaut of the 21st Century. Aldershot, England: Ashgate, 2008. Internet resource. Naughton, Barry. The Chinese Economy: Transitions and Growth. Cambridge, Mass: MIT Press, 2007. Print. Tkacheva, Olesya. Internet Freedom & Political Space. , 2013. Internet resource. Tsai, Kellee S. Capitalism Without Democracy: The Private Sector in Contemporary China. Ithaca, N.Y: Cornell University Press, 2007. Print. United Arab Emirates: Selected Issues and Statistical Appendix. Washington, D.C: International Monetary Fund, 2011. Internet resource. Read More