The effects of e-commerce - Essay Example

Since the 1960s the then political leadership in Abu Dhabi have played a crucial role in boosting the economy and the welfare state for the federation. Administratively, the UAE is a federation of seven emirates, each with its own ruler. The pace at which local government in each emirate evolves from traditional to modern is set primarily by the ruler. Under the provisional constitution of 1971, each emirate reserves considerable powers, including control over mineral rights (notably oil) and revenues.

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In this environment, federal powers have developed slowly. The constitution established the positions of president (chief of state) and vice president, each serving 5-year terms; a Council of Ministers (cabinet), led by a prime minister (head of government); a supreme council of rulers; and a 40-member National Assembly, a consultative body whose members are appointed by the emirate rulers (wikipedia 2007).

Since achieving independence in 1971, the UAE has worked to strengthen its federal institutions, each emirate still retains substantial autonomy, and progress toward greater federal integration has slowed in recent years. A basic concept in the UAE Government’s development as a federal system is that a significant percentage of each emirate’s revenues should be devoted to the UAE central budget.

As a result of the growth and development of Dubai and the UAE the wealth that has been generated leads to the growth of a middle class independent of the state, as well as to rising levels of education, a growing number of mass media’s and means of communication and therefore a larger spread of information. Despite this the UAE still seems to far beyond the emergence of any meaningful political life. The rulers hold power on the basis of their inherited position and their legitimacy in a system of tribal agreement. Rapid modernisation, enormous strides in education, and the influx of a large foreign population have changed the face of the society but have not fundamentally altered this traditional political system.

Given the high revenue derived from oil, the UAE government like many in the Persian Gulf region collect very low taxes, if any at all. As a result, these governments including the UAE’s, face very low levels of accountability and representation demands from their people, and even when they exist the governments are highly resistible by nature to pressures from below and have shown their ability to contain them. Oil wealth makes possible a fairly high standard of living for the people, but enables the government to keep the public politically demobilized, oil wealth can have a strong negative impact on the level of democracy.

As a Muslim country, one of the fundamental principles enshrined in the Constitution provides that Islamic Law (Sharia) is the main source for legislation in the UAE. The Federal Government is entrusted with the task of spreading legislation and regulating the principal and central aspects of the Federation. These include foreign affairs, defence, security, the federal judicial system, federal finance and loans, postal and communication services, federal public works, civil aviation, education, public health, currency, electricity services, nationality and related matters, management of federal possessions, census and federal information.

In the UAE the establishment of the Civil and Criminal Courts resulted in diminishing the role of the Sharia Courts. Nevertheless, the competence of the Sharia Courts in some Emirates, particularly Abu Dhabi, was substantially expanded later on to include, in addition to matters of personal status, all types of civil and commercial disputes as well as serious criminal offences. Therefore, in addition to the Civil Courts, each of the seven Emirates maintains a parallel system of Sharia Courts which are organised and supervised locally. (wikipedia 2007)

The legislation for the business in the UAE is very different to other parts of the western world notably Europe and the US, those wanting to setup a business within Dubai are permitted to do so as long as UAE nationals hold 51% of the shares. This ownership law may present a potential barrier to some investors who want to own there own business and for those who do not have contacts with potential sponsors within the U.A.E. There is however an alternative and that is to setup an office inside one of the many Free zones such as JAFZA, where there is no need for a local partner and the business is 100% foreign owned.

Economic

The UAE has one of the highest per capita incomes in the Arab world, due in part to the fact that it claims the world’s third largest proven oil deposits. In the past several decades, however, the UAE has introduced new industries such as trade and tourism, and by 1998 oil-based industry accounted for only one-third of the UAE’s GDP. This diversification has helped to cushion the impact of oil price volatility over the past several years and continued stable investment policies generated real GDP growth through 2002 despite a drop in oil revenues then. Today oil is approaching $100 a barrel and with this comes a large injection of extra revenue for development and investment.

To encourage continued economic growth, the UAE is in the midst of a 20-year economic diversification plan, and the government has allotted roughly $13 billion toward the development of the non-oil economy. The emirates are pursuing economic liberalization in various sectors including hydrocarbons, petrochemicals, tourism, aviation and airports, power generation and telecommunications. Free trade zones have been quite significant in contributing to economic growth, with Dubai becoming a central hub for regional trade and finance, accounting for about 70 percent of the emirates’ non-oil trade while Abu Dhabi has lead the privatization drive. (arabdatanet 2005)

Construction and tourism are key non oil drivers, property related spending remains high and international and regional interest in Dubai’s The Palm, Dubai Land and The World is strong. Work on the world’s tallest tower, Burj Dubai is well under way, other Emirates, such as Ras al Khaimah, have also announced major real estate schemes. The scope of existing projects does raise the risk of oversupply but it will ensure that growth remains strong in Dubai and the UAE in the near term. Tourism has also continued to thrive, despite the regional backdrop. Industry figures suggest that Dubai hotels have enjoyed occupancy levels over 90%. (emirateseconomist 2006)

The UAE’s GDP grew by 8.5 per cent in real terms in 2005 due to strong growth in non-oil sectors, according to the International Monetary Fund. The numbers reflect the real GDP for 2005 after accounting for a rise in prices due to inflation. The IMF estimated inflation at 8 per cent but noted it may be higher. The UAE Ministry of Economy recently said the country’s nominal GDP grew by 26.4 per cent last year. Local economists suggesting the inflation rate to be between 15 and 20 per cent and the rise in costs has led to increasing questions about the sustainability of current growth levels (emirateseconomist 2006).

Social

The United Arab Emirates as well as Dubai is a very mixed country with many different nationalities and religions all living and working together, the UAE is primarily Muslim and as with any religion any criticism or mocking to the Islamic religion or local culture would cause very serious reactions. According to the 2005 UAE census the UAE population is 4,104,695, of which 20.1 per cent are UAE Nationals, this compared with 2,411,041 in the last census conducted in 1995 is a 70% increase, the total number of non-nationals is 2,944,159, which is 78.1% of the total population that were counted in the reference period, and it is 79.9% (3,279,774) of the total UAE population. The total number of non-national males is 2,128,986, which is 72.3% and the total number of non-national females is 815,173, which is 27.7% (emirateseconomist 2006).

This is a very large imbalance in the social make up of the country and could cause social issues for the country, if there are so few women it could lead to an imbalance in relationships and marriage which form part of the natural human cycle and with an average age of around 30 it also has a very young population, therefore low-status young adult men with little chance of forming families of their own are much more prone to attempt to improve their situation through violent and criminal behavior in a strategy of coalitional aggression (Baculinao2004).

With such a diverse and mixed culture in terms of race, religion and ethics the UAE and Dubai faces many issues of integration and social acceptance. The UAE is in the top bracket of countries that take in migrants from the developing world. That is despite the country having a low population in comparison with others who were placed high in the same league table. Overall it showed that in a 12-month period almost three million people migrated from the developing world to industrialised nations. The UAE receives more than a quarter of a million of them – the fourth highest in the world behind the United States, Italy and Spain. The country is placed ahead of the United Kingdom despite the population here being 55 million less.

With regard to telecommunications Dubai has more than 2.71 million telephone lines, of which 2.3 million are mobile telephone lines and 535,995 land phone and fax lines. The number of Internet lines is 173,155 in addition to 482 telex lines, this shows that people are more mobile and want the flexibility that a mobile phone offers, especially as the pace of life in Dubai is so very fast (uaeinteract 2006).

Technological

Technology can have a substantial impact on peoples lives and companies fortunes, technology break throughs have given us the body scanner, robotics, mobile phones, camcorders, computers etc (Jobber 2007). There is no doubt that technological change brings about social change but it can also have a negative impact, in the beginning the Industrial revolution saw many people displaced from their land, to find work in crowded city factories and with advent of the computer and robotics many people in the modern age also found them selves out of work.

The UAE and especially Dubai are at the forefront of technological development in this region, the GITEX exhibition is growing year on year attracting many top international brands from around the world. And with the modern development of Dubai and the UAE the boundaries of what is possible are being pushed back all the time, such as the construction of the World and Palm which are man made Islands and the Burj Duabi the tallest tower in the world.

Technology can provide opportunities for new products and also threats to existing markets, technology also affects the way the way in which marketing is conducted. The internet and mobile phone have allowed companies to use new channels of communication and distribution, technology can be used to improve the efficiency and effectiveness of their marketing operations (Jobber, 2007).

The effects of e-commerce, communication and the internet will have an impact on almost every society. The barriers of trade between individuals in different countries are falling. Company contact details are searchable through powerful search engines, and trade can commerce between two individuals who would otherwise never have met. The internet dissolves national boundaries, and the consequences for cities that have developed as centers of administration and trade could be disastrous, if they do not embrace the technological advances in communication and trade that the internet brings. While at the same time, free trade means fierce competition without the protection of award wages (Passioncomputing 2007).