comparison of uae and french economy

8/10/2019 Comparison of UAE and French Economy

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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 1

France 1UAE 1

Relation 1

Choice of Variables 1

2. Data Analysis 2

Gross Domestic Product 2

GDP per Capita 2

Inflation (GDP Deflator and CPI) 2

Population and Population Growth 2

Unemployment Rate 2Foreign Direct Investment (Net Inflows) 2

3. Comparative Analysis 3

Gross Domestic Product 3

Components of GDP 3

GDP per Capita 4

Inflation (GDP Deflator and CPI) 5

Population and Population Growth 6

Unemployment Rate 7

Foreign Direct Investment (Net Inflows) 7Indicators at a Glance 8

• GDP Growth 8

• Ease of Doing Business 8

Latest News from UAE and France 8

4. Trend Analysis 9

5. Bibliography 10

6. Appendices 11

Data from World Development Indicators 11

Components of GDP – Graphs 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 fromWorld 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 3 rd 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 economy3. 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

1



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 serviceswithin 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.

2



GDP per Capita:

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.

0.0

5000.0

10000.0

15000.0

20000.0

25000.0

30000.0

35000.0

40000.0

45000.050000.0

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

G D P p e r C a p i t a

Years

GDP per Capita from 2002 to 2013

France

UAE

0

20000

40000

60000

80000

100000

120000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

G D P p e r

C a p i t a P P P

Years

GDP per Capita PPP from 2002 to 2013

France

UAE

4



Inflation (GDP Deflator and CPI):

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 didn’tspare it and there was slight fall in inflation rates most probably due to tumbling oil prices.

-20

-15

-10

-5

0

5

10

1520

25

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

I n f l a t i o n - G D P D e f l a t o r

Years

Inflation - GDP Deflator from 2002 to 2013

France

UAE

02

4

6

8

10

12

14

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

I n f l a t i o n - C P ( i n % )

Years

Inflation - CP from 2002 to 2013

France

UAE

5



Unemployment Rate:

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:

0

2

4

6

8

10

12

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

U n e m p l o y m e n t R a t e

Years

Unemployment Rate from 2002 to 2013

France

UAE

0

1

2

3

4

5

6

7

8

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

F D I

Years

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

France

UAE

7



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:

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

-6

-4

-2

0

2

4

6

8

10

12

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 G D P G r o w t h i n %

Years

GDP Growth from 2002 to 2013

France

UAE

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 oneissue which must be addressed to help increase the country’s 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.

9



BIBLIOGRAPHY

1. World Data Bank 2014, World Development Indicators, accessed on 05/07/2014,

http://databank.worldbank.org/data/views/variableSelection/selectvariables.aspx?source=world-

development-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-display-

1.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-267. 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.html11. Augustine, B.D 2013, Expo 2020 ‘will raise Dubai’s GDP growth, spending and debt’, accessed

13/07/2014, http://gulfnews.com/business/economy/expo-2020-will-raise-dubai-s-gdp-growth-

spending-and-debt-1.1263615

10



APPENDICES

1. Data from World Development Indicators

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013France 56.431 56.841 56.619 56.907 56.728 56.495 56.882 58.102 58.092 57.723 57.682 57.457

UAE 63.507 60.550 62.389 58.274 57.763 61.740 61.344 54.564 58.960 51.692 49.753 ..

Private Consumption (% of GDP)

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

France 23.452 23.804 23.760 23.756 23.455 23.090 23.274 24.776 24.879 24.481 24.737 24.937

UAE 8.775 8.466 7.789 6.866 6.248 5.932 5.746 9.543 8.540 7.316 6.904

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)

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

FranceExport 27.505

25.911 26.144 26.360 27.024 26.856 26.949 23.369 25.534 26.895 27.436 27.197

France

Import 25.97925.016 25.739 26.993 28.069 28.405 29.054 25.196 27.797 29.859 29.652 29.161

UAE

Export 49.50355.923 63.568 67.585 68.631 72.384 78.867 79.261 78.378 90.315 95.152 ..

UAE

Import 43.56846.377 53.055 51.968 50.845 64.414 69.646 73.445 71.902 72.279 74.469 ..

Net

France 1.526 0.895 0.404 -0.633 -1.045 -1.548 -2.105 -1.827 -2.263 -2.963 -2.217 -1.964

Net

UAE 5.935 9.546 10.513 15.618 17.786 7.970 9.221 5.816 6.476 18.036 20.683

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

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

France 1.917 2.109 2.135 1.736 1.684 1.488 2.814 0.088 1.530 2.117 1.956 0.864

UAE .. .. .. .. .. .. 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 8 7.4 9.1 9.3 9.2 9.9 ..

UAE 2.5 2.7 2.9 3.1 3.3 3.4 4 4 4 4 3.8 ..

Unemployment (% of Total Labor Force)

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

France3.414 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

0.000

10.000

20.000

30.000

40.000

50.000

60.000

70.000

200220032004200520062007200820092010201120122013 P e r s o n a l C o m s u m p t i o n i n % o

f

G D

P

Years

Personal Consumption from 2002 to 2013

France

UAE

13



0.000

5.000

10.000

15.000

20.000

25.000

30.000

200220032004200520062007200820092010201120122013

G o v e r n m e n t C o n s u m p t i o n i n % o

f

G D P

Years

Government Consumption from 2002 to 2013

France

UAE

0.000

5.000

10.000

15.000

20.000

25.000

30.000

35.000

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

I n v e s t m e n t i n % o

f G D P

Years

Investment from 2002 to 2013

France

UAE

0.00010.00020.00030.00040.00050.00060.00070.00080.00090.000

100.000

N e t E x p o r

t s i n % o

f G D P

Years

Net Exports from 2002 to 2013

France Export

France ImportUAE Export

UAE Import

14

comparison of uae and french economy

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