United Arab Emirates – Snapshot
of changing trade patterns
In this article we examine the changing composition and competitiveness of the UAE’s exports
– excluding petroleum and gas - with a particular focus on the technological intensity of those
exports. The analysis is based on the most recently available consistent annual trade statistics
(i.e. up to 2010) as provided by the UN Comtrade database. The discussion is very much
intended to see “what the data tells us” about the evolving nature of the UAE’s pattern of
trade.
Before focussing in on the non-petroleum and gas exports it is important to reflect upon the
importance of these in the exports of the UAE. The graph below gives the share of petroleum
and gas products in the exports of the UAE. What emerges clearly is the declining total share
of petroleum and gas from a high of 93% of total exports in 2000 to 58% in 2010. Note that
while the share declines the absolute value of these exports is still rising over this time period.
So the declining share simply means that exports in other sectors / products are growing
more. Out of these exports of petroleum and gas products we see that the shares of crude
petroleum (HS 2709), distilled products (HS 2710), and gas (HS2711) fluctuates somewhat
with the share of crude ranging from 88% in 2010 to 63% on 2002.
This declining share of petroleum products suggests the growing diversification of the export
profile. In order to consider this in more detail we look at the top ten non-petroleum and gas
exports in 2010 at the HS 4-digit level of aggregation, and see how this trade has evolved over
time. At the 4-digit level there are a total 1239 possible export sectors, and out of these the
UAE had some exports in 1206 categories. Out of these 1206 categories, the top ten (nonpetroleum and gas) 4-digit products accounted for just over 22% of the UAE’s total exports in
2010. The next ten most exported products only accounted for an additional 5% of TradeSift is a product
of InterAnalysis Ltd.
the UAE exports. The same top ten products accounted for less than 0.3% of the InterAnalysis Ltd. registered office:
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UAE’s exports in 2000. Hence, these 10 products alone have seen a big increase in their
importance. The shares of each of these products are given in the chart below; and what we
see from this chart is the dominance of gold exports (8.9%), followed by jewellery (2.9%) and
motor vehicles (2.5%). There are only seven sectors with an export share greater than 1%.
The chart below then considers the extent to which these products exported by the UAE can be seen
as being “competitive” in world markets. In order to do this we have calculated the indicator of
“Revealed Comparative Advantage” (RCA) for the UAE for these products. The RCA uses the underlying
data on trade to compare the share of exports of the product in a country’s total exports compared
with the share of the product in the world’s total exports. This measure thus examines the degree of
international competitiveness of a product/sector in the world as ‘revealed’ by the trade data. The
indicator ranges from -1 to 0 for relatively uncompetitive industries; and from 0 to 1 for relatively
competitive ones. The chart gives the RCA for each of these 10 products for both 1999 and 2010 which
enables us to see how competitiveness appears to have changed.
Several features are of note here. First we see that out of the top 10 products exported in 2010, there
is only one product – 7112 (waste or scrap of precious metals) where the UAE had a positive RCA in
1999. By 2010, the UAE has a positive RCA for 7 out of the 10 products, but interestingly still has a
negative RCA for three of the products: 8471 (automatic data processing machines); 8703 (motor
vehicles), and 8708 (parts and accessories for motor vehicles). Secondly, we see that for all of the
products there is an increase in the relative competitiveness of the UAE in world markets.
The preceding focuses on ten products only, and it is worth also taking a broader perspective. So in
the chart below we track for each year (the blue line, based on the left hand axis) the number of
products which the UAE exports for which they have a positive revealed comparative advantage. Once
again in counting the number of products we have excluded petroleum and gas products. On the right
hand axis we plot the share of the UAE’s exports which these products account for. What we see is
that in 1999 the UAE had a comparative advantage in 22 products, and these products accounted for
just over 5% of exports. In 2010, there were 106 products with a positive RCA, and these accounted
for nearly 26% of exports. This is a clear indication of both the growing diversification of exports, and
the growing share of non-petroleum and gas exports, which reflects what we saw earlier.
Competitiveness and diversification
120
30
100
25
80
20
60
15
40
10
20
5
0
0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
No. products with positive RCA
Share of exports
Rather than looking at just the most important export products, in the following we consider
the full range of products exported by the UAE but where we classify the trade by level of
technological intensity. This is based on the OECD’s STAN industry list which distinguishes
between high-tech, medium-high tech, medium-low tech, low-tech products as well as those
that could not be assigned. The chart below shows the evolution of trade since 2002 for these
different categories of trade where, as before, we have excluded the petroleum and gas
products.
There are several interesting features which emerge from this analysis. The first is that we see
a clear decline in the importance of medium-high technology and low technology products.
This is primarily driven by the rise in the importance of medium-low technology intensity
products which by the end of the period account for just over 35% of the non-petroleum and
gas exports. We also see a smaller rise over the entire time period of high technology
products, though with some variability over the years.
Here it is interesting to establish within each technological intensity category how
concentrated is the trade in just a few products, or whether there trade is more highly
diversified. One way of capturing this is to use the Trade Concentration Index. This is a very
useful index which ranges between 0 and 1. The closer the index gets to 1 the more
concentrated is the export structure. At the limit, if the indicator were equal to 1, this would
mean that there as only one sector indicating. If the indicator were equal to 0.5, than this
would mean that taking into account the distribution of all the sectors exporting the structure
is equivalent to 2 equal sized industries. The figure below gives the concentration index for
each of the technological intensity categories, from 1999-2010.
TCI by Tech Level 1999-2010
0.70
0.60
0.50
0.40
0.30
0.20
0.10
0.00
1999
2000
2001
2002
High
2003
2004
Med-High
2005
2006
2007
Med-Low
2008
2009
2010
Low
Several things are interesting here. The first is that for all the categories it appears that the
UAE’s exports are quite concentrated. The TCI suggests that the number of equivalent sized
export industries for low technology products is just over 4, and for the High, Medium-High
and Medium-low categories the number of export industries is equal to 6, 9 and 12
respectively. Secondly, that if we compare the beginning of the period with the end, there is
a clear decline in the index for low technology products and for high technology products
(though note the spike in concentration for high technology in the early 2000s). This suggests
that in these categories the UAE’s exports have become more diversified. There is little
change in the degree of diversification for Medium-Low technology products, and a modest
increase in the concentration of trade for Medium-High technology products.
Given the relatively high concentration of the UAE’s exports, the table below indicates which
are the three most important export products within each of the technological intensity
categories. If we compare this to Figure 2 above where we identified the top 10 products
exported by the UAE we see that the first three of these each fall into different technology
intensity categories: gold is “medium-low”, jewellery is “low”, and motor vehicles are in the
“medium-high” category; and that each of these products appear in the table even when the
ranking is done by technological intensity.
Top Three Products Exported by Technological
Intensity - 2010
(Figures in Thousands of United States Dollars)
Tech
Level
Product
code
Product Name
Exports
Exports
Share
High
8517
Electric apparatus for line telephony, telegraphy
2,352,155.43
1.83%
High
8803
Parts of aircraft, spacecraft, etc
1,732,451.94
1.35%
High
8471
Automatic data processing machines (computers)
843,939.25
0.66%
Low
7113
Jewellery and parts, containing precious metal
3,689,194.41
2.87%
Low
7112
Waste or scrap of precious metal
1,161,141.84
0.90%
939,998.17
0.73%
3,237,063.75
2.52%
1,399,301.66
1.09%
768,490.37
0.60%
11,508,385.06
8.95%
1,525,599.22
1.19%
837,791.50
0.65%
Woven synthetic filament yarn, monofilament
>67dtex
Motor vehicles for transport of persons (except
buses)
Low
5407
Med-High
8703
Med-High
8708
Parts and accessories for motor vehicles
Med-High
8704
Motor vehicles for the transport of goods
Med-Low
7108
Gold, unwrought, semi-manufactured, powder form
Med-Low
8905
Special purpose ships, vessels, nes
Med-Low
4011
New pneumatic tyres, of rubber
(Source: Comtrade via WITS 4-Digit)
The following table then identifies which are the three products / sectors within each of the
technological intensity categories which have seen the biggest increase in exports. The aim
of this is to see if there are any emerging growing export products within each of the
categories. What is interesting here is that there is only one category (8905 – Special purpose
ships) which figures both as one of the top three products in 2010, and also as a product
within the Medium-Low Technological intensity category which experienced a rapid increase
in exports. The lack of overlap between the two tables suggests that the sorts of products
identified in the second of these tables might be evidence of emerging sectors / products in
the UAE’s export profile.
Top Three Products with the Biggest Increase in
Exports 2005-10
(Figures in Thousands of United States Dollars)
Group
Product
Product Name
2005
Share
2010
Share
2010
Exports
High
2940
Sugars, chem pure, their ethers, esters, salts...
0.00%
0.02%
24,579.04
High
8517
Electric apparatus for line telephony, telegraphy
0.12%
1.83%
2,352,155.43
High
8532
Electrical capacitors, fixed, variable or adjustable
0.01%
0.06%
79,818.65
Low
2306
Oil-cake other than soya-bean or groundnut
0.00%
0.07%
88,797.06
Low
4502
Natural cork, debacked, roughly squared
0.00%
0.00%
57.21
Low
1514
Rape, colza, mustard oil, fractions, simply refined
0.00%
0.02%
28,203.41
Med-High
5402
Synthetic filament yarn(not sewing thread)
0.00%
0.08%
106,976.42
Med-High
8601
Rail locomotives, electrically powered
0.00%
0.00%
479.54
Med-High
3103
Mineral or chemical fertilizers, phosphatic
0.00%
0.00%
3,841.08
Med-Low
8905
Special purpose ships, vessels, nes
0.00%
1.19%
1,525,599.22
Med-Low
7408
Copper wire
0.00%
0.11%
143,628.58
Med-Low
7611
Aluminium reservoirs, vats, tanks, etc,
0.00%
0.00%
4,204.96
(Source: Comtrade via WITS 4-Digit)
One way of considering whether these might be emerging sectors for the UAE is to examine the
relative competitiveness of these sectors in world markets. In order to do this we again use the
indicator of Revealed Comparative Advantage (RCA) for the UAE for these products. The data suggests
that none of these products had a revealed comparative advantage in world markets in 2005.
However, by 2010 their competitiveness had improved in all cases; and five of these products have
positive revealed comparative advantage in world markets (2306, 2940, 7611, 8517, 8905). So while
the current share of many of these products may be small, there is some evidence that these may
constitute emerging products / exports for the UAE.