The UAE might have made bad investment decisions, but the figures prove that they are taking firm steps towards becoming an industrial country.

It appears one of the winners of the Arab Spring was the United Arab Emirates (UAE). Last week, Sheikh Muhammad bin Rashid al Maktum, the prime minister of the UAE and the ruler of Dubai, reported fund inflows of $8.2 billion from Yemen, Egypt, Syria, and Tunisia in the last two years. You might ask why these countries invest in the UAE, which probably will reinvest the funds in western countries. This used to be the case, but not anymore. We still assume that things will stay as they used to be, yet the world has been changing. And the change is rather swift. Just in 1995, 90 percent of the total exports of the UAE were composed of petroleum, natural gas, and their products. As of 2010, their share decreased to 54 percent. Just in a blink’s time between 1995 and 2010, the UAE started to transform itself into an industrial country. Currently a top re-exporter, the UAE’s economic vision for 2030 puts emphasis on the development of the pharmaceuticals, biomedicine, and defense industries. I think it is important that the UAE is making great efforts to transform itself from a natural resource-based economy to an industrial one. In this line, we have to give up the “they have the money, we have the industry” perception, immediately.

Recently I was chatting with some friends from Azerbaijan. I mentioned the UAE: the country seems to be a worthwhile answer for our region to the question of how to diversify the resources and the structure of an economy. A year and a half ago, they had asked, “Can the UAE’s and Turkey’s companies engage to target the eastern European markets?” I remember being shocked. My bad. Like I said, we have the illusion that the world revolves around us and that Turkey will remain the most dazzling industrial country of its region without putting any extra effort. We are totally wrong. We have no doubt that the UAE invests the fund inflows elsewhere. We are wrong. We are underestimating the UAE. Yes, they might make bad investment decisions as they have no budgetary constraint, but the figures validate that the UAE is taking firm steps toward becoming an industrial country. Between 1995 and 2010, the UAE succeeded in diversifying its economy while Azerbaijan, which has a more diversified import basket, has limited itself to petroleum as its key export.

I used to name three industrial countries in our region: Israel, Turkey, and Russia. Now we must get used to adding the UAE to our calculations. The UAE is currently 27^th of 142 countries in the Global Competitiveness Index. It is one of the most advanced countries in the world concerning infrastructural and institutional quality and macroeconomic balances. Currently a re-exporter country, the UAE seems likely to attain a central position in the pharmaceuticals, biomedicine, and defense sectors in the future. Turkey must overcome the idleness caused by the belief that it will remain the strongest industrial economy in its region no matter what, and stop underestimating its rivals in the region.

Just mark my words: If Turkey does not complete the Istanbul-Diyarbakir highway immediately, don’t be surprised if producers from Gaziantep move their production bases to the UAE.

This commentary was published in Radikal daily on 19.02.2013