Question

Question 4. CLO4 The GCC countries’ economies had been growing steadily over the past few years since the financial crisis of 2008 and their economies grew at 3.16% in 2016. A) How long will take to double their economic growth? (2 Point) Using the RULE OF 70 to find the time it will take GCC countries to double their economic growth at a growth rate of 3.16% Doubling Time = 70/growth rate Doubling Time = 70/3.16 = 22.15 years

B) Explain what factors might influence UAE’s future rate of economic growth. (3 Point)

answer Part b

Answer 1

B)

Factors that can influence UAE Future rate of economic growth:

- Increase in investment in human capital: if UAE adopts policy to invest heavily in the human capital of its nation, then there can be increase in future economic growth. On the contrary, lower human capital stock signifies lower chances of better economic growth in future

- Natural Resources: availability of resources like land highly affect the future outlook of the economic growth

- Consumer and Investor confidence: a higher consumer and investor confidence boost the future the economic growth

- Labor productivity: Higher labor productivity implies higher current output and better outlook for future growth

- Technology: technological advancements shift the PPF curve of UAE outward indicating rise in economic growth.

- Current Rise in UAE Government Spending: This will raise the purchasing power of the general public and therefore increase the current demand of goods and services. The aggregate demand rises indicating a rise in the current economic growth. This will raise future expectations of economic growth.