Economic Diversification of the United Arab Emirates through the Space Sector and Its Diplomacy

Abstract

The article’s subject is the state of the United Arab Emirates, established in 1971 in a primarily desert area with approximately 180,000 inhabitants, almost entirely Arab. Today, the country is home to over 10 million people from over 200 nations and is undergoing a massive transformation. However, to avoid the consequences of becoming dependent on oil revenues, the UAE (top oil producer) is implementing economic diversification programs. This process is accompanied by a dynamic development of the state’s activity in space. The research objective is to examine the UAE’s space sector’s phenomenon and diplomatic activity, which impacts the country’s economic diversification. Consequently, research questions were posed: what initiatives can significantly contribute to the development of the UAE space industry, nonoil export, and, consequently, to economic diversification? What international space programs should be crucial for diplomacy? At the epistemology level, within the theoretical framework, the paper applied international political economy to explain the issue of diversification. Meanwhile, economic development theory focuses on production, consumption, and trade changes. In its light, the article discusses the rentier state theory, the concept of the resource curse, and the “Dutch disease” syndrome. To find answers to the research questions, appropriate empirical methods were used: quantitative research, statistical analyses, observation, including participant observation, and case studies. Additionally, the Herfindahl Hirschman Index (HHI), the Dickey-Fuller test (ADF), the autoregression model (VAR), the Johansen cointegration test, the vector error correction model (VECM), and the Granger causality test were applied. The methods contributed to obtaining the results and finding answers to the research questions. Hypothesis validation shows that numerous initiatives of the United Arab Emirates to build the space industry have not yet impacted economic diversification, but they have great future potential.