A COMPARISON BETWEEN THE ECONOMIES OF THE UAE

AND THE FRANCE

Prepared By

Muhammad Ali Danish 4464333

Submitted to
Prof Asima Shirazi
&
Prof Scott Fargher

TBS905: Economic Analysis of Business

Date: July 16, 2014

TABLE OF CONTENTS

1. Introduction
France
UAE
Relation
Choice of Variables
2. Data Analysis
Gross Domestic Product
GDP per Capita
Inflation (GDP Deflator and CPI)
Population and Population Growth
Unemployment Rate
Foreign Direct Investment (Net Inflows)
3. Comparative Analysis
Gross Domestic Product
Components of GDP
GDP per Capita
Inflation (GDP Deflator and CPI)
Population and Population Growth
Unemployment Rate
Foreign Direct Investment (Net Inflows)
Indicators at a Glance
GDP Growth
Ease of Doing Business
Latest News from UAE and France
4. Trend Analysis

1
1
1
1
1
2
2
2
2
2
2
2
3
3
3
4
5
6
7
7
8
8
8
8
9

5. Bibliography

10

6. Appendices

11

Data from World Development Indicators

Components of GDP Graphs

11
13

INTRODUCTION
The purpose of this report is to compare the economies of France and United Arab Emirates by defining
economic variables associated with GDP, broader indicators and the data available for those variables is
then plotted on graphs to highlight the similarities and differences between the two economies. To back
up the claims scholarly articles and news regarding these variables are then related to the data, used from
World Bank. The structure of the report is based on a brief insight of two economies, data analysis,
comparative analysis and finally a trend analysis to forecast the possible plans of two economies.
France:
France, situated in Western Europe, is one of the most modernized states and is a permanent member of
UN, EU, G-8, G-20 and other organizations. It has the 2nd largest GDP in EU after Germany. With 82
million tourists, France is the most visited country in the world and maintain the 3rd largest income from
tourism. Its major exports are machinery and transportation equipment, aircraft, plastics, chemicals,
pharmaceutical products, iron and steel, beverages. It produces over 75% of its electricity from nuclear
energy (World Nuclear Association).
United Arab Emirates:
UAE, situated in Middle East, is one of the most developed countries in the region. Its GDP per capita is
on par with western countries and has the 2nd largest economy in the region (after KSA). The main export
is oil and gas whereas tourism and construction also play an important part. Other export commodities
include dried fish, re-exports and dates. The free zone industrial areas are an attractive source of foreign
investment. According to a report in 2006, people from 202 nationalities reside in the country.
Relations:
Since both countries are well developed and well run countries, they have strong economic and trade
relations. UAE is one of the biggest trade surplus partners of France with capital good, intermediate
goods, consumer goods and equipment being major exports of France. Similarly, airplane manufacturing
giant Airbus, has three of its clients as Emirates, Etihad and Air Arabia (Shaban, 2014). These are a
couple of examples from a long list of joint ventures and visions of these two countries.
Choice of Variables and Indicators:
There are various indicators in different forms that can be used to analyze the economy of a country
because measuring the economic growth requires extensive research and meticulous details to portray the
economy to its truest state.
The following variables for the analysis are selected keeping in mind convenience and data availability
1. GDP as economic variable - Most utilized measure of economic growth of a country
2. GDP per Capita as an Indicator - To show the true picture of an economy
3. Inflation Rates - How GDP is affected in Recession
4. Population and Population Growth - Availability of resources for the people of a country
5. Unemployment Rates - Percentage of utilization of labor force
6. Few Indicators at a Glance

DATA ANALYSIS

1. Gross Domestic Product:

Gross Domestic Product (GDP) is a type of economic tool that is utilized by governments and
economists as a means of measuring or attributing a value to the final goods and related services
within a defined economy in a stated period by domestic and foreign supplied resources.
According to Economist, 2014, output can be measured in three theoretically equivalent ways
a. Adding up all money spent each year
b. Adding up all money earned each year
c. Adding up all the value added year each
Using the expenditure or output approach, there are four components of GPD namely
a. Private Consumption (C)
b. Government Consumption (G)
c. Investment (I)
d. Net Export Expenditure (X-M)
Y = C + G + I + (X M)
2. GDP per Capita:
Higher the population, higher would be the GDP. As a result, it is not quite possible to estimate
the status of an economy solely based on the GDP. GDP per capita is the average income of an
individual and is obtained by dividing the GDP by the total population at the middle of the year
for that year.
3. Inflation Rates:
Inflation is the sustained increase in price level overtime. It decreases the purchasing power of the
people hence affecting the GDP.
4. Population and Population Growth:
Although not directly related to GDP, population plays an important role. Population level must
be kept in check with respect to the total resources available to a country otherwise it would
create other possible problems.
5. Unemployment Rate:
According to World Bank, Unemployment refers to the share of the labor force that is without
work but available for and seeking employment. Higher the unemployment, lower will be the
GDP.
6. Foreign Direct Investment (Net Inflows):
According to World Bank, Foreign direct investment are the net inflows of investment to acquire
a lasting management interest (10 percent or more of voting stock) in an enterprise operating in
an economy other than that of the investor. It has a direct effect on the GDP of a country.

COMPARATIVE ANALYSIS

Gross Domestic Product:

GDP from 2002 to 2013

3.000E+12

GDP in Trillions

2.500E+12
2.000E+12
1.500E+12
France
1.000E+12

UAE

5.000E+11
0.000E+00

Years

The above shows the GDP of the two countries. Since France has substantially bigger population its GDP
is also greater. Point to note that both countries suffered during the recession period but are now on the
up.
Components of GDP:

France GDP
1.526
18.591

UAE GDP
11.600
C

G
23.452

56.431

22.704

58.230

X-M

7.466

I
X-M

The above pie charts are drawn by taking the 4 components of GDP and averaging each of them for 10
years. While private consumption provides the big share of GDP, the government consumption in France
is relatively high. Net exports play a pivotal role in GDP of UAE which is visible. Their Oil and Gas
supplies make up the major part of the exports where as a lack of manufacturing industries like chemicals
etc forces them to import these materials.
3

GDP per Capita:

GDP per Capita

GDP per Capita from 2002 to 2013

50000.0
45000.0
40000.0
35000.0
30000.0
25000.0
20000.0
15000.0
10000.0
5000.0
0.0

France
UAE

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Years

GDP per Capita PPP from 2002 to 2013

GDP per Capita PPP

120000
100000
80000
60000

France

40000

UAE

20000
0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Years

From the above charts, there is somewhat a conflict between Nominal GDP and GDP PPP which backs
ups the shortcoming of Nominal GDP. After the mild recession of early 2000s the French economy grew
steadily until it hit the global recession in 2008. Another decline can be seen in 2012 but that was due the
presidential elections that were held in France and subsequent change in policies. The GDP PPP almost
shows a horizontal line.
The GDP PPP for UAE has declined since the mid-2000s mainly due to the real estate world. The rents
have increased massively which has left many a people to find alternative ways to survive in the country.
However following the recession, the GDP per capita has started to increase again in both nominal and
purchasing power parity terms.
4

Inflation (GDP Deflator and CPI):

Inflation - GDP Deflator from 2002 to 2013

Inflation - GDP Deflator

25
20
15
10
5

France

0
-5 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

UAE

-10
-15
-20

Years

Inflation - CP from 2002 to 2013

Inflation - CP (in %)

14
12
10
8
6

France

UAE

2
0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Years

From the two graphs, it can be seen how badly UAE was hit by the recession in 2009. People lost jobs,
demands for goods and services fell alarmingly as a result costs came down. Interesting, the staggering
decline in GDP deflator shows how badly investment patterns were affected. Since the basket definition
was changed in UAE there is no data available prior to 2007 for Inflation of Consumer Prices.
For France, the condition was a lot more stable as seen in graph. However, the 2009 recession didnt
spare it and there was slight fall in inflation rates most probably due to tumbling oil prices.

Population and Population Growth:

Total Population from 2002 to 2013

70.0E+6

Population

60.0E+6
50.0E+6
40.0E+6
30.0E+6

France

20.0E+6

UAE

10.0E+6
000.0E+0
200220032004200520062007200820092010201120122013
Years

Population Growth in %

Population Growth from 2002 to 2013

20
18
16
14
12
10
8
6
4
2
0

France
UAE

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Years

The above chart shows that the population of France is growing at a constant rate. In 2006, Pison reported
that steady increase in population in the preceding years was due to the greater number of births than
deaths and also due to net migration of population.
On the other hand, if we analyze the UAE economy, there is a bell curve. This is due to the fact a large
number of immigrants entered UAE due to thriving economy of the country in the years 2005 to 2007.
The subsequent decline is due the Global Recession which hit the country, specially the Emirate of Dubai,
hard which resulted in a large number of people losing their jobs and hence forced to travel back to their
countries.

Unemployment Rate:

Unemployment Rate from 2002 to 2013

Unemployment Rate

12
10
8
6

France

UAE

2
0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Years

After the introduction of Euro, the unemployment rates of almost all EU countries fell around 2001 and
France was no exception to it. This pattern is visible in early 2000s. However there was a further decline
in the unemployment rates in 2007-2008 as the government took steps to subsidize the low wages sectors
and help older workers to leave the market. However the subsequent recession has taken its toll and the
unemployment rate is France is again on the up and is inching towards the high of late 1990s.
Over in UAE, the unemployment rate has generally been low but that is due to the high influx of
expatriates. In 2009 (Baxter), around 40,000 Emiratis were out of work and due to considering the low
population of locals but steps in last couple of years have been taken to improve the situation and private
sector has hired a substantial number of Emiratis.
Foreign Direct Investment:

FDI of Net Inflows in % of GDP from 2002 to 2013

8
7
6
FDI

5
4

France

UAE

2
1
0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Years

According to OECD report, the FDI in France has been on a decline in the last decade except 2005 when
there was a big jump. The reason was that only few French companies were the subject of takeover from
large multinational organizations. Despite the steady decline, a recent report from Kaczmarski (2013)
shows that France is still in the top 5 destinations for FDI with IT, software, electronics the popular field.
He also says that around 693 new projects came to France mostly from North America, UK and Asia.
Since the change of trade policies in 2000, there has been only one way for UAE FDI and that is up
except for the global recession. But the country is now again on the up as can be seen from the graph.
The free zones specially are of great interest to the investors with government encouraging foreign
investment and assisting with the trade laws.

Some Indicators at a Glance:

Annual GDP Growth:

GDP Growth from 2002 to 2013

12
GDP Growth in %

10
8
6
4

France

UAE

0
-2

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

-4
-6

Years

Being a relatively new economy with lots of potential UAE has seen continuous improvement is annual
growth of GDP in last 10 years with the famous global recession being the exception. France on the other
hand have been relatively stable.
Ease of Doing Business Index:
UAE continues to make improvement with a ranking of 23 in 2013 from 26 in 2012. France on the other
hand slipped from 35 to 38 in the same period.

Latest News from UAE and France Economy:

Increase in UAE economy by 5.2% in 2013 Gulf News

Weak consumer spending and business spending resulting in no increase in French economy
Reuters
Healthy economic outlook with GDP growth of 4.75 forecasted for UAE in 2014, say IMF Gulf
News
8

France inflation rate of 0.8% for April 2014 Gulf News

Slow recovery from global crises by France and unemployment to remain high, say IMF Gulf
News

TREND ANALYSIS

So from the data it can be depicted that, UAE will continue to grow its economy by maintain high
standards, trade, high employment rate and high GDP annual growth. According to the report in Gulf
News (2013) the Dubai Expo 2020 will further help to increase the GDP by 1.5% but it will also increase
the already debt though debt to gdp ratio will get lower till 2020. From business perspective, Dubai can
continue to offer a large number of expatriates the employment opportunities because of room for
infrastructure and construction.
For France, the government should try to strategically play a smart game to further enhance the FDI by
target marketing the new investors and also based it around the geography. Unemployment rate is one
issue which must be addressed to help increase the countrys GDP.
Both the countries were affected by the Recession of 2008-09 especially UAE as it is more of an
emerging market with massive room for advancement. France on the other hand, is a giant and is more
stable. Government has also played an important part in revival in case of both countries from the global
crises.
So the there are few similarities between the two economies but there are difference as well which are
expected since the two countries have different geographical locations, different demographics, different
resources and different sizes of population but one common thing is that both are booming economies
with substantial room to move forward.

BIBLIOGRAPHY
1. World Data Bank 2014, World Development Indicators, accessed on 05/07/2014,
http://databank.worldbank.org/data/views/variableSelection/selectvariables.aspx?source=worlddevelopment-indicators
2. CIA 2014, The World Factbook, accessed on 05/07/2014,
https://www.cia.gov/library/publications/the-world-factbook/
3. World Nuclear Association 2014, Nuclear Power in France, accessed 14/07/2014,
http://www.world-nuclear.org/info/Country-Profiles/Countries-A-F/France/
4. Anonymous 2006, 202 nationalities in labour market, accessed 14/07/2014,
http://www.khaleejtimes.ae/DisplayArticleNew.asp?xfile=data/theuae/2006/August/theuae_Augu
st735.xml&section=theuae&col=
5. Shaban, S 2014, UAE, France to boost trade, economy ties, accessed 14/07/2014,
http://www.khaleejtimes.com/kt-article-display1.asp?xfile=data/uaebusiness/2014/July/uaebusiness_July144.xml&section=uaebusiness
6. Anonymous 2014, How countries calculate their GDP, accessed 14/07/2014,
http://www.economist.com/blogs/economist-explains/2014/03/economist-explains-26
7. Pison, G. 2006, "The population of France in 2005", Population & Societies, vol.421, pp.1-4,
accessed 07/07/2014,
http://search.proquest.com.ezproxy.uow.edu.au/docview/198247436/fulltextPDF?accountid=151
12
8. OECD 2006, FDI into OECD countries jumps 27% in 2005, accessed 08/07/2014,
http://www.oecd.org/general/fdiintooecdcountriesjumps27in2005.htm
9. Kaczmarski, M. 2013, "Global Outlook: News - France 'in top five FDI destinations'", Foreign
Direct Investment, accessed 08/07/2014,
http://search.proquest.com.ezproxy.uow.edu.au/docview/1369362935?pq-origsite=summon
10. Baxter, E 2006, UAE unemployment among locals at highest level, accessed 10/07/2014,
http://m.arabianbusiness.com/uae-unemployment-among-locals-at-highest-level-17032.html
11. Augustine, B.D 2013, Expo 2020 will raise Dubais GDP growth, spending and debt, accessed
13/07/2014, http://gulfnews.com/business/economy/expo-2020-will-raise-dubai-s-gdp-growthspending-and-debt-1.1263615

10

APPENDICES

1. Data from World Development Indicators

France
UAE

2002
56.431
63.507

2003
56.841
60.550

2004
56.619
62.389

2005
56.907
58.274

2006
56.728
57.763

2007
56.495
61.740

2008
56.882
61.344

2009
58.102
54.564

2010
58.092
58.960

2011
57.723
51.692

2012
57.682
49.753

2013
57.457
..

2009
24.776
9.543

2010
24.879
8.540

2011
24.481
7.316

2012
24.737
6.904

2013
24.937

Private Consumption (% of GDP)

France
UAE

2002
23.452
8.775

2003
23.804
8.466

2004
23.760
7.789

2005
23.756
6.866

2006
23.455
6.248

2007
23.090
5.932

2008
23.274
5.746

Government Consumption (% of GDP)

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

France

18.591

18.460

19.217

19.970

20.863

21.964

21.948

18.950

19.292

20.759

19.797

19.570

UAE

21.783

21.438

19.309

19.242

18.204

24.358

23.689

30.077

26.024

22.956

22.661

..

Investment (% of GDP)

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

25.911

26.144

26.360

27.024

26.856

26.949

23.369

25.534

26.895

27.436

27.197

25.016

25.739

26.993

28.069

28.405

29.054

25.196

27.797

29.859

29.652

29.161

55.923

63.568

67.585

68.631

72.384

78.867

79.261

78.378

90.315

95.152

..

46.377

53.055

51.968

50.845

64.414

69.646

73.445

71.902

72.279

74.469

..

1.526

0.895

0.404

-0.633

-1.045

-1.548

-2.105

-1.827

-2.263

-2.963

-2.217

-1.964

5.935

9.546

10.513

15.618

17.786

7.970

9.221

5.816

6.476

18.036

20.683

2002
France
Export
France
Import
UAE
Export
UAE
Import
Net
France
Net
UAE

27.505
25.979
49.503
43.568

Net Export (% of GDP)

11

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

France

1452

1792

2055

2136

2255

2582

2831

2619

2565

2782

2611

2734

UAE

109

124

147

180

222

257

315

254

287

348

383

..

GDP (In Billions of USD)

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

France

23494

28794

32785

33819

35457

40342

43992

40488

39448

42578

39759

41421

UAE

34062

36906

40404

43534

45554

44489

46403

33013

34049

39058

41692

..

GDP per Capita (USD)

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

France

34570

34635

35256

35630

36256

36856

36621

35286

35718

36264

36085

..

UAE

106186

110549

111544

103140

96400

83655

73611

61725

57380

56377

57045

..

GDP per Capita PPP (USD)

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

France

2.218

1.997

1.674

1.912

2.141

2.587

2.542

0.716

0.961

1.287

1.530

1.140

UAE

3.771

4.072

8.501

16.526

11.957

12.539

18.533

(15.156)

10.948

16.754

5.494

..

Inflation GDP Deflator

France
UAE

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

1.917

2.109

2.135

1.736

1.684

1.488

2.814

0.088

1.530

2.117

1.956

0.864

..

..

..

..

..

..

12.250

1.560

0.879

0.877

..

..

Inflation CP Index

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

France

61.8

62.2

62.7

63.2

63.6

64.0

64.4

64.7

65.0

65.3

65.7

66.0

UAE

3.2

3.4

3.7

4.1

4.9

5.8

6.8

7.7

8.4

8.9

9.2

9.3

Population (In Millions)

12

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

France

0.727

0.708

0.736

0.753

0.697

0.618

0.559

0.514

0.494

0.492

0.509

0.534

UAE

2.891

4.408

8.241

12.574

16.141

17.315

15.932

12.687

8.957

5.570

3.095

1.514

Population Growth (Annual %)

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

France

8.7

8.6

9.2

8.9

8.8

7.4

9.1

9.3

9.2

9.9

..

UAE

2.5

2.7

2.9

3.1

3.3

3.4

3.8

..

Unemployment (% of Total Labor Force)

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

France

3.414

2.403

1.597

4.155

3.930

3.604

2.264

1.026

1.522

1.468

1.077

0.123

UAE

0.087

3.423

6.767

6.035

5.766

5.500

4.350

1.571

1.914

2.203

2.502

..

Foreign Direct Investment Net Inflows (% of GDP)

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

France

0.929

0.899

2.545

1.827

2.467

2.285

-0.081

-3.147

1.725

2.027

0.014

0.214

UAE

2.433

8.801

9.566

4.855

9.837

3.184

3.192

-4.804

1.671

3.880

4.365

..

GDP Growth (Annual %)

2. Components of GDP Graphs

Personal Comsumption in % of
GDP

Personal Consumption from 2002 to 2013

70.000
60.000
50.000
40.000
30.000

France

20.000

UAE

10.000
0.000
200220032004200520062007200820092010201120122013
Years

13

Government Consumption in % of
GDP

Government Consumption from 2002 to 2013

30.000
25.000
20.000
15.000

France

10.000

UAE

5.000
0.000
200220032004200520062007200820092010201120122013
Years

Investment from 2002 to 2013

Investment in % of GDP

35.000
30.000
25.000
20.000
15.000

France

10.000

UAE

5.000
0.000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Years

Net Exports in % of GDP

Net Exports from 2002 to 2013

100.000
90.000
80.000
70.000
60.000
50.000
40.000
30.000
20.000
10.000
0.000

France Export
France Import
UAE Export
UAE Import

Years

14