From oil to knowledge industries: Abu Dhabi's Falcon Economy takes off

Big bets in technology and AI are transforming the Middle East's richest economy.

- Vikram Khanna

After Dubai's economy hit the skids during the global financial crisis of 2008, its neighboring emirate Abu Dhabi rescued it by extending a US$10 billion lifeline. Then, in 2010, the world's tallest building, located in Dubai and originally named Burj Dubai, was renamed Burj Khalifa in honor of the then ruler of Abu Dhabi, Sheikh Khalifa Bin Zayed Al Nahyan. That sent a not-so-subtle message: the real power in the United Arab Emirates (UAE) resides in Abu Dhabi, not Dubai.

The capital, and by far the biggest and richest of the seven emirates that make up the UAE, Abu Dhabi occupies more than three-quarters of the UAE's land area, accounts for 90 per cent of its oil production and some 60 per cent of its GDP. It also has the highest per capita income at around US$85,000 (S$113,000). Its sovereign wealth funds control assets north of US$1.7 trillion - more than those of Norway, China, Singapore and Saudi Arabia - which makes it the world's richest city as measured by financial assets.

A 'NEW RICH' EMIRATE Its prosperity is relatively recent. Until the 1960s, Abu Dhabi lived mainly off fishing, pearl diving and agriculture and was sparsely populated with nomadic Bedouins. The discovery of oil in 1958, and subsequent jumps in energy prices, dramatically changed its fortunes.

Abu Dhabi's rulers have invested the emirate's windfall gains astutely, in physical infrastructure - which is now world class - as well as education, social amenities and efficiently administered public services. Today, a single digital platform called Tamm offers access to some 900 government services, including those related to identity, housing, transport, police, education, healthcare, culture, legal services and the environment.

Oil dominated the economy till the 1990s, but thereafter the government started to diversify into downstream industries such as oil refining and petrochemicals, as well as financial services, manufacturing, real estate and tourism.