ORIGINAL RESEARCH article

Front. Polit. Sci., 28 November 2025

Sec. Political Economy

Volume 7 - 2025 | https://doi.org/10.3389/fpos.2025.1661283

Energy policy and diplomacy of the UAE and other resource-oriented countries in the transition to technological development

  • 1. Department of International Relations and World Economy, Al-Farabi Kazakh National University, Almaty, Kazakhstan

  • 2. School of Law and Public Administration, Narxoz University, Almaty, Kazakhstan

  • 3. Department of Theory and History of International Relations, Peoples Friendship University of Russia, Moscow, Russia

Abstract

Introduction:

The transition from a resource-based economy to alternative economic systems represents one of the most pressing challenges in the current global context. The environmental aspect significantly influences energy policy, serving as a foundation for transforming the economies of leading energy-exporting countries. The United Arab Emirates (UAE) presents a notable example of a successful transition from a resource-based economy to technology-driven development, as evidenced by its energy policy and diplomatic strategies. The aim of this study was to examine the global external energy policy and diplomacy of the UAE and other Persian Gulf countries energy policy and diplomacy incorporated a methodological approach combining qualitative and quantitative methods energy policy and diplomacy, as well as strategies employed by other countries, vividly demonstrates the global significance of these processes., focusing on its role in the profound transformation of the energy market.

Methods:

Methodologically, the study involved comparative analysis, as well as an assessment of global energy transition trends and their relationship with international diplomacy, using the UAE as a case study.

Results:

The share of revenue from the UAE’s oil sector in total exports declined from 93.8% in 2000 to 68.2% in 2023. Investments in the economy nearly tripled between 2005 and 2023, reaching $30.7 billion. Findings from the model analysis indicate that an abrupt reduction in resource dependence could result in economic difficulties in the short term. However, in the medium and long term, this path is the most favorable, contingent upon the rapid expansion of high-technology exports. Based on the VECM results for the UAE, Saudi Arabia, Kuwait, and Oman, targeted recommendations for energy and economic policy can be formulated. Given that oil production acts as the main long-term determinant but remains largely unadjusted in the short term. In contrast, global oil prices and energy intensity exert strong short-term effects on GDP and exports, the energy policies of these countries should aim to diversify long-term development strategies in extraction and strengthen mechanisms for responding to external shocks.

Discussion:

The practical application of these research results lies in their potential use for studying other oil-producing countries and devising recommendations for an effective transition from resource dependence to innovation-driven progress.

1 Introduction

The high volatility of global prices and the international community’s commitment to sustainable development goals have become major challenges for countries dependent on oil and gas revenues (; ; ; ). This has necessitated a shift in their long-term energy policies and the pursuit of economic diversification strategies. However, not all countries have successfully transitioned from a resource-based economy to technological progress (; ; Yap et al., 2022). Consequently, significant scholarly attention has focused on examining the energy policy and diplomatic approaches of nations attempting to reduce their economic dependence on natural resources. A particularly noteworthy case is that of the United Arab Emirates (UAE). Over the past two decades, the UAE has emerged as a regional leader in the innovative transition toward a new economy based on digital technology and alternative energy (; Mistarihi et al., 2025).

The global energy system is currently undergoing a complex shift from decades of coal and oil dominance toward renewable and alternative energy sources (; ; Kaya and Kaya, 2025; ). The transition to low-carbon energy has considerable potential to reshape the relationships between energy producers and consumers, raising critical and understudied geopolitical issues for major energy-dependent countries. In this context, diplomacy has become a key instrument of foreign policy for managing the consequences of the energy transition (Griffiths, 2019). The strategic decision-making process in international politics and diplomacy must therefore incorporate the principles of policy coherence and feedback (; ).

Initially, the energy diplomacy of the oil-producing countries of the Middle East was based on using energy resources as a lever of influence to achieve political and economic objectives, leveraging their vast reserves and geostrategic positions. In recent years, however, international efforts have focused on reducing geopolitical risks in the region, which necessitates a shift not only toward clean energy but also toward strengthening global energy governance and diversifying the economies of Middle Eastern countries (Wen, 2024).

Within the context of global energy transformation, a key research direction concerns how Middle Eastern states are restructuring their energy strategies and governance institutions to reduce dependence on natural resource revenues and external assistance (). The transition from fossil fuels to renewable energy sources is examined not only through the lens of climate commitments but also as a consequence of protracted conflicts in critical regions, primarily in the Middle East and Eurasia. The combined effects of climate change and military conflicts underscore the need to enhance global energy supply chains and address the problem of resource dependency. Energy diplomacy provides a promising pathway toward achieving this goal through diversification and technological advancement ().

Energy diplomacy represents a complex domain of international relations, deeply intertwined with foreign policy and national security (). Within this framework, it is important to consider the UAE’s decades-long experience in developing energy policy and diplomacy during its transition from resource dependence to technology-driven innovation. An analysis of both existing and planned energy projects in the UAE, along with its economic diversification efforts, holds considerable scientific and practical relevance. Examining these aspects is crucial for comprehending their impact on the international landscape and the emerging architecture of global relations (). Over recent decades, the UAE has achieved remarkable progress in implementing strategic initiatives for sustainable development. The country has successfully transitioned toward innovative approaches in high-technology sectors, particularly in tourism, transportation logistics, infrastructure, and digitalization. However, several challenges persist that demand international coordination and increased investments in education, human capital, and scientific research (; ; Ewers, 2016; ). The UAE’s economic model demonstrates long-term strategic vision, efficient utilization of natural resources, and innovative pathways. The analysis offers valuable insights for other countries, highlighting the importance of continuous reforms and adaptations to achieve sustainable growth and global economic integration.

The scholarly novelty of this study on UAE energy policy and diplomacy lies in its analysis of the country’s unique approach to transitioning from a traditional resource-based economy to technological innovation. This investigation revealed and analyzed new models of economic diversification and sustainable growth strategies. The practical value of the present study emerges from its potential to inform effective strategies for other resource-dependent nations seeking economic diversification. The findings provide crucial insights into complex energy system transformations and their implications for economic and political stability in the Persian Gulf region.

1.1 Literature review

1.1.1 Global challenges and energy policy

The decline in oil prices at the end of 2014 and the beginning of 2015, which remained low until early 2022, had a significant impact on the economies of the Gulf countries and prompted them to actively seek pathways for economic diversification (). The energy transition imposes serious challenges on the MENA region, where many states have historically built their development models on hydrocarbon exports. At the same time, these countries are striving to capitalize on the new paradigm, adapt to the global transition economy, and optimize oil and gas revenues by developing other sectors of the economy ().

Saudi Arabia structures its energy diplomacy within the framework of the national Vision 2030 program, emphasizing economic diversification, regional stability, and multipolar cooperation. The country is also enhancing its geopolitical influence at the international level by mediating regional conflicts, strengthening its religious and diplomatic presence, and maintaining its leadership in the global energy market ().

At the present stage, the UAE has established two primary vectors of development—economic priorities and sustainability objectives (). The nation’s strategic goals focus on ensuring long-term energy security while maintaining leadership in the global energy transition process. Concurrently, the country is implementing measures to reduce its carbon footprint through decreased emissions in oil extraction operations and enhanced control of greenhouse gas emissions ().

The UAE demonstrates a strong capacity to achieve carbon neutrality through its renewable energy policies (). In recent years, the country has expanded its presence in the renewable energy sector by financing green infrastructure projects, thereby demonstrating its commitment to sustainable development (Mistarihi et al., 2025). Photovoltaic power stations have emerged as a particularly advantageous alternative, offering more competitive electricity generation costs compared to existing gas-fired power plants (). By prioritizing technological advancement, the UAE has successfully attracted foreign human capital, facilitating the transfer of cutting-edge knowledge and global expertise (). However, emerging global challenges and risks associated with transitioning from a hydrocarbon-dominated economy to one based on sustainable energy require significant adaptations in national policy and diplomatic approaches (Aminjonov, 2020).

1.1.2 New diplomacy and economic diversification

The dependence of oil-exporting countries on revenue from energy resources underscores the importance of supply stability and places economic diversification among the key priorities of national security. The central dimensions of energy diplomacy encompass revenue and resource management, global policy and international relations, as well as societal culture and values (). Oman’s niche diplomacy illustrates how a small state with limited resources can enhance its relevance through neutrality and mediation in an unstable region. However, this strategy has evident constraints. Its influence is mainly expressed through cautious assistance and informal negotiations and rarely results in broader regional transformations. Moreover, economic vulnerability exacerbates this challenge. It is crucial to recognize that dependence on oil and gas revenues and the need to attract foreign investment may blur the line between impartial mediation and the protection of economic interests ().

The rapid transformations witnessed in the Middle East and globally over the past two decades have necessitated greater regional and international engagement as a key strategic priority for the UAE. The new trajectory of Emirati policy is characterized by a distinct shift. Since the beginning of the 21st century, the country has replaced the diplomatic solutions and soft power approaches that dominated the latter half of the 20th century with proactive intervention and direct engagement. Contemporary UAE diplomacy increasingly employs “smart power” strategies, effectively balancing hard and soft power elements to advance national interests. This approach addresses both existing and potential security risks while supporting economic growth ().

The implementation of diversification policies has enabled the UAE to develop innovative economic sectors effectively, particularly in clean energy production. These efforts have contributed substantially to structural economic transformation and technological sectors (). Recent years have witnessed the emergence of energy diplomacy as a novel component of both foreign and domestic policy ().

Diplomatic strategies prioritizing digital infrastructure and investment attraction have become particularly prominent features of Emirati foreign policy (). Nevertheless, not all diversification models yield sustainable outcomes. After decades of evolution, UAE economic policy has undergone a paradigm shift. Persistent oil revenue volatility, intensifying market globalization, environmental commitments, and recent structural changes in energy markets have collectively necessitated a new approach focused on sustainable diversification and economic resilience. Current discourse on the UAE’s transition to a sustainable economy now centers on future state policies, economic strategies, and the necessary initiatives and compromises (El Anshasy and Khalid, 2023).

Since 2010, the UAE has implemented its national development strategy, “Vision 2021.” The government has demonstrated a strong commitment to realizing this long-term vision, which outlines a transition toward a sustainable and diversified economy based on knowledge. Furthermore, the UAE continues to advance “Vision 2021” through various policy initiatives aligned with the United Nations Sustainable Development Goals for 2030. This strategic framework combines market deregulation and support for foreign trade and service sectors to create favorable conditions for business and innovation. Particular emphasis has been placed on fostering sustainable growth and economic diversification through the systematic expansion of non-oil sectors over the past decade. Despite considerable progress in economic diversification, ample opportunities remain for refining current strategies ().

The examination of energy policy and diplomacy within the context of transitioning from a resource-based to a technology-driven economy represents a critical area of research. This subject requires a thorough analysis of multidimensional factors and their complex interrelationships. Previous studies have predominantly focused on resources as primary drivers of economic growth, while paying insufficient attention to the mechanisms facilitating technological integration in the energy sector. This oversight has resulted in substantial deficiencies in the knowledge of how resource-rich nations can effectively leverage their assets to promote innovation and sustainable development.

This study sought to identify strategies that enable countries to sustain energy resources and welfare levels during the transition to advanced, environmentally sustainable energy production. To address the identified research gaps, this study analyzed successful transition examples, particularly the UAE case, which offers valuable empirical evidence. Based on the findings, the study yielded policy recommendations for other nations pursuing technological advancement in their energy sectors. Consequently, this research not only bridges existing theoretical gaps but also establishes a scientific foundation for a new paradigm in energy policy formulation.

1.2 Problem statement

This study seeks, through a comparative analysis of the characteristics, differences, and shared frameworks of energy policy and diplomatic efforts across various Gulf countries, to examine the main strategic directions undertaken in the transition from resource-dependent economies to technologically advanced and diversified ones. An examination of the UAE’s role in global energy policy holds particular relevance amid climate change challenges and the transition to sustainable energy sources. The nation’s experience demonstrates that countries with substantial hydrocarbon reserves can simultaneously advance technological production capabilities and ensure economic diversification. An analysis of emerging strategies in energy diplomacy would identify key trends and mechanisms driving global energy and economic transformations, thereby facilitating the formulation of effective policy frameworks in this domain.

The aim of this study was to investigate the distinctive characteristics of global external energy policy and diplomacy, with particular focus on the UAE’s role in the ongoing transformation of energy markets. To achieve this objective, the following research tasks were formulated. First, this study sought to elucidate the fundamental features of external energy policy and diplomacy, with specific reference to the UAE, within the context of global energy market transformation. The second task was to examine the changing proportion of the oil sector within the UAE’s economy and identify key trends through comparison with other Persian Gulf states. Subsequently, the investigation analyzed the UAE’s policy measures, initiatives, and programs aimed at transitioning toward a technological innovation economy, while assessing their effectiveness. A final, crucial objective involved developing a predictive model for the country’s developmental trajectory based on the collected and analyzed data using regression analysis. The model evaluated various scenarios and forecasts concerning the evolving role of energy markets, the growth of innovative technology sectors, structural economic transformation, and the impact of global oil price fluctuations.

2 Methods

2.1 The conceptual framework

This research employed comparative and situational analysis methods to examine the aspects of technological advancement in the UAE and other Persian Gulf countries. A holistic approach was adopted, incorporating various factors that stimulate economic diversification. These include macroeconomic variables, economic policy features, structural reforms, and institutional aspects, as previously proposed by other researchers (). The study also draws upon Morgenthau’s international theory (Zambernardi, 2022). This theoretical framework explains the UAE’s application of “soft power” in foreign diplomacy and energy policy, particularly regarding adherence to ethical principles and mutual respect.

2.2 Methodological design and research stages

The analysis of the UAE and other Persian Gulf countries’ energy policy and diplomacy incorporated a methodological approach combining qualitative and quantitative methods. This dual approach provided a comprehensive understanding of the country’s energy policy dynamics and their impact on international relations. Qualitative methods involved examining official documents, including energy policy strategies and reports from government organizations and international agencies. These were accessed through official web platforms such as the United Arab Emirates’ Government portal (), the , and the International Renewable Energy Agency (IRENA) using contextual search methods. The study also explored key directions and priorities of UAE energy policy as presented in leading academic journals (Journal of International Affairs, International Journal of Energy Economics and Policy, International Journal of Sustainable Energy, MRS Energy and Sustainability, among others) and analytical institutes (; ). Additionally, global data on Energy Intensity for the period 1970–2024 () were utilized, obtained from the Bourne2Learn.com web portal.

Quantitative methods encompass the collection and analysis of statistical data on energy production and consumption, energy resource export/import volumes, and energy sector investments. Data sources included global databases from the World Bank, United Nations, U.S. Energy Information Administration, and the International Energy Agency (IEA). This examination enabled a systematic evaluation of the economic and social consequences of UAE energy policies.

Additionally, a comparative analysis was conducted between the energy policy of the UAE and those of Saudi Arabia and Oman. These countries were selected due to shared challenges related to resource-dependent economies and differing strategies for addressing these challenges. Specific comparative metrics included fuel exports (% of merchandise exports) and total natural resource rents (% of GDP). The comparison revealed unique aspects and common trends in energy diplomacy.

Moreover, the study analyzed global primary energy consumption patterns by region and fuel type using statistical data. This analysis aimed to identify key trends and structural shifts that could inform effective strategies for sustainable energy development and global carbon footprint reduction. Special attention was given to projected changes in energy consumption structure through 2050, as this timeframe represents a critical benchmark for achieving Sustainable Development Goals regarding global carbon neutrality. To assess and forecast energy consumption levels, the study evaluated the average annual percentage change in energy consumption from 2022 to 2050. This approach facilitated a comparison of major vectors in global energy policy across different world regions.

2.3 Research model

The regression analysis was conducted using the heteroskedasticity-corrected method. The statistical software Gretl 2024b was employed to perform the regression analysis. The dependent variable selected was GDP per capita (current US$). The independent variables comprised key macroeconomic indicators related to the country’s economic growth: oil production in the UAE (million tons), world crude oil price ($/barrel), fuel exports (% of merchandise exports), and total population (million). The inclusion of these variables in the regression analysis was justified by the research objectives, which aimed to examine the complex relationship between living standards, economic structure, the role of the energy sector, and the influence of global oil prices.

Based on the coefficients obtained from the heteroskedasticity-corrected regression model, three dual-variant models were developed. These models incorporate five predictive scenarios for GDP per capita (current US$) under different strategic development vectors for the UAE in the short term. The models account for oil production volumes, fluctuations in global oil prices, and the advancement of technology-driven economic sectors. The models were scientifically validated and constructed in accordance with potential vectors for future strategic modernization.

Additionally, a multivariate time series model of the VECM type was estimated. The following indicators were included as exogenous variables: Data (1970–2023), World crude oil price (US$/barrel, average), and World Energy Intensity (EJ/$T). The endogenous variables comprised Merchandise Exports (current million US$), GDP (current million US$), and Oil Production (million tons).

2.4 Research materials and sample formation

The empirical foundation of this study comprises data on the current state of the UAE’s energy sector and assessments of its global prospects. Key data, including oil production volumes, average market prices, petroleum product export shares, and demographic population statistics, were collected from the World Bank’s World Development Indicators (World Bank Group, 2025), , and the These data were essential for developing an econometric model to substantiate predictive scenarios for various UAE strategy vectors in the short term, considering oil production levels, global oil price fluctuations, and the advancement of high-technology sectors.

The study utilized two distinct time series datasets. The first series (1970–2023) examined the dynamics of economic welfare indicators, oil production, and global price fluctuations. This longitudinal analysis facilitated the assessment of UAE energy policy transformation amid global geopolitical and economic changes, including periods of international crises. The second time series (2000–2023) focused on contemporary trends in economic diversification and cross-country comparative analysis of resource dependence. All statistical computations were performed using Microsoft Excel 2021 software.

2.5 Limitations

Several methodological constraints should be acknowledged, including data availability restrictions, linguistic and cultural barriers, and potential alternative interpretations of information. These limitations were carefully considered during the analysis and are not expected to significantly impact the study’s overall validity. The proposed regression model may not fully capture the real complexities of the global oil market and the dependence of oil-producing countries on uncertainties such as geopolitical conflicts or technological breakthroughs that affect economic development. However, this limitation does not diminish its scientific and practical value for forecasting and may serve as a foundation for developing more advanced models that account for price shock non-stationarity and structural breaks in the global market. To enhance forecast robustness, it would be advisable to complement the model in future research with scenario analysis and stress testing, incorporating potential geopolitical and technological shifts.

3 Results

An analysis of global primary energy consumption by region and fuel type, along with projections through 2050, reveals a deceleration in fossil fuel usage alongside the increasing adoption of alternative energy sources. This global trend reflects current energy policy directions toward the post-carbon era. The projected average annual growth rate of global consumption between 2022 and 2050 is 0.7% for petroleum-based liquid fuels, 0.9% for natural gas, 0.1% for coal, and 0.8% for nuclear energy. Growth for other alternative energy sources is expected to reach approximately 2.8% (Table 1).

Table 1

Region and fuel2022202520302035204020452050Average annual percentage change, 2022–2050
Americas
Liquid fuels57.657.656.756.557.358.860.80.2%
Natural gas45.743.543.843.845.547.048.70.2%
Coal11.310.16.16.56.56.56.2−2.1%
Nuclear9.49.39.48.87.77.57.3−0.9%
Other28.631.639.944.848.051.555.72.4%
Total152.6152.3155.8160.3165.0171.2178.70.6%
Europe and Eurasia
Liquid fuels38.138.537.436.736.737.338.20.0%
Natural gas43.744.546.047.249.151.253.70.7%
Coal16.516.214.714.814.915.816.40.0%
Nuclear10.410.611.111.311.211.011.10.2%
Other21.423.025.128.231.132.935.11.8%
Total130.1132.9134.3138.1143.1148.3154.40.6%
Asia Pacific
Liquid fuels71.477.283.188.392.897.5101.71.3%
Natural gas35.337.540.342.846.050.254.41.6%
Coal133.7133.0140.2143.1141.6140.9141.60.2%
Nuclear7.68.710.512.013.214.014.92.4%
Other44.753.062.574.387.6101.1111.53.3%
Total292.6309.4336.6360.5381.1403.7424.11.3%
Africa and the Middle East
Liquid fuels23.324.824.825.827.329.131.11.0%
Natural gas28.629.831.433.635.838.140.31.2%
Coal4.64.55.16.16.37.27.92.0%
Nuclear0.40.60.91.21.41.41.44.9%
Other5.77.19.210.712.214.516.83.9%
Total62.566.971.477.483.190.497.61.6%
World
Liquid fuels190.4198.2202.0207.3214.0222.8231.90.7%
Natural gas153.3155.4161.4167.4176.4186.5197.00.9%
Coal166.0163.8166.1170.4169.3170.5172.10.1%
Nuclear27.729.331.933.433.633.934.70.8%
Other100.5114.8136.8157.9178.9199.9219.02.8%
Total637.8661.4698.2736.4772.2813.6854.71.1%

Global consumption of different types of energy and fuel by region.

Source: .

Table 1 presents electricity generation from renewable sources (hydropower, wind turbines, and solar panels) converted to British thermal units (Btu) using a conversion factor of 8,124 Btu per kilowatt-hour. Global alternative energy production may reach 136.8 Btu by 2030, compared to 100.5 Btu in 2022 and a projected 114.8 Btu in 2025. By 2050, alternative energy consumption is anticipated to nearly equal liquid fossil fuel consumption, with 219 Btu and 231.9 Btu, respectively. As of 2022, the UAE possessed available energy reserves totaling 107 billion barrels of oil and 7.7 trillion cubic meters of natural gas (Table 2).

Table 2

UAE energy reserves (2022)
Fossil fuelsNuclearRenewable
SolidLiquidGasUraniumHydroSolar PVSolar CSPLandfill
UnitTonBillion barrelsTrillion cubic meters——Installed capacity (MW)Installed capacity (MW)Installed capacity (MW)
Total amount in specific units01077.7——1,875 MWShams 1 (100 MW)1 MW (Al Qusais Landfill)
Total amount in exajoules (EJ)0623.2204.4—————
Liquid consists of crude only. It has been converted to energy at 44.2 GJ/ton. Natural gas has been converted to energy at 950 GJ/million cubic feet.

Estimated available energy sources.

Source: .

The country demonstrates particularly strong potential in solar energy. Through state-sponsored initiatives, the UAE continues to strengthen its solar energy sector by implementing large-scale renewable energy investment projects. These measures directly support national sustainable development goals and the 2050 climate neutrality target.

The UAE currently operates three of the world’s major solar power plants, with plans to expand its renewable energy capacity to 14.2 gigawatts by 2030. This demonstrates the country’s commitment to sustainable transformation and solidifies its leadership in the global energy transition. Solar energy plays a crucial role in maintaining the nation’s energy balance. In line with the updated and , the government aims to triple clean energy production in the coming years.

The UAE also views solar energy as a strategic tool for climate change mitigation. Large-scale renewable energy projects not only meet growing electricity demand but also enhance regional and global energy security while fostering diplomatic relations. Moreover, the modernization of energy transmission and distribution infrastructure further promotes international energy integration. These initiatives underscore the country’s dedication to sustainable technology investments and reinforce its position as a global leader in renewable energy.

Another key area of international energy cooperation involves advancing nuclear power. The UAE has constructed one of the world’s largest nuclear power plants, Bakarah NPP, featuring four units with a total installed capacity of 4,251 MW as of January 1, 2024. Figure 1 illustrates the main directions of the UAE energy policy. Despite increasing oil production, the country continues to pursue economic diversification and a gradual reduction of resource dependence.

Figure 1

and .

The UAE has substantially departed from traditional OPEC principles in its energy policy and foreign diplomacy, increasingly employing elements of “soft power.” Such instruments are actively utilized in international engagements and joint investment projects. This approach fosters sustained trust in international relations and maintains a favorable investment climate.

An analysis of economic trends and structural transformation in the UAE reveals steady progress despite reduced oil sector contributions to total exports. The share of oil revenues declined from 93.8% in 2000 to 68.2% in 2023, while the national economy expanded considerably through new sectors and service industries (Table 3). Comparative analysis with other energy-exporting nations from the Persian Gulf and Central Asia—particularly Saudi Arabia, Oman, and Kazakhstan—demonstrates superior outcomes in the UAE’s implementation of its new energy policy and economic diversification strategy. This is evidenced by more substantial reductions in fuel exports as a percentage of total merchandise exports.

Table 3

YearUnited Arab EmiratesKuwaitOmanSaudi ArabiaMiddle East and North AfricaOECD membersKazakhstanWorld
200093.894.383.292.379.45.050.111.4
200191.893.280.689.578.84.756.111.2
200255.792.577.589.666.34.658.310.3
200348.393.476.889.763.44.961.210.3
200454.194.691.189.867.35.464.310.8
200557.7n. a.91.891.067.66.570.111.8
200662.396.591.491.071.36.868.712.7
200763.796.389.190.270.96.766.012.4
200862.396.586.491.470.48.768.714.2
200943.593.275.087.860.97.269.512.3
201050.092.877.887.665.38.071.713.5
201153.594.874.488.766.39.372.014.5
201247.2n. a.83.588.661.99.669.914.0
201355.894.282.687.666.79.376.314.5
201450.895.281.785.264.19.076.413.9
201537.792.576.278.456.66.967.711.4
201631.692.776.177.555.66.060.710.3
201736.093.673.779.855.67.363.311.2
201868.590.975.281.065.08.470.012.6
201977.894.476.379.665.68.266.212.4
202071.492.963.667.662.46.465.410.2
202170.394.665.377.566.28.565.611.9
202273.196.074.0n. a.60.312.068.013.2
202368.295.574.2n. a.46.710.158.911.5
2023 to 2000−25.61.2−9.0−14.8−32.75.18.80.1

Fuel exports (% of merchandise exports).

Source: World Bank Group (2025).

The UAE’s economic expansion has been particularly noteworthy, with GDP increasing from $104.3 billion in 2000 to $514.1 billion in 2023. Correspondingly, GDP per capita rose from $29,865.5 to $49,040.7 during the same period. Additionally, high-technology exports grew significantly from $493.1 million in 2012 to $3,417.6 million in 2023 (Appendix A). High-technology exports comprise research and development (RandD) products, including aerospace equipment, computers, pharmaceutical products, scientific instruments, electrical machinery, robotics, software, and artificial intelligence (AI) technologies.

The analysis of the UAE National Energy Strategy 2050 revealed that export diversification constitutes a fundamental component of the country’s contemporary economic policy (). This strategic approach aims to reduce dependence on oil revenues while establishing a sustainable and technology-driven economy. Data from official government documents available on the United Arab Emirates’ Government portal demonstrate that both public institutions and private enterprises have actively worked to expand the nation’s export capabilities across various economic sectors in recent decades. These diversification efforts include significant advancements in the chemical and metallurgical industries, with increased production of aluminum, steel, and chemical products. Such industrial growth has enabled the UAE to secure competitive positions in international markets. The country’s strategic geographic location and advanced infrastructure, including port and airport facilities, have transformed it into a crucial trade hub for Middle Eastern, Asian, and African markets. This advantage has substantially boosted re-export volumes and transportation logistics. According to UNCTADstat data (2025), tourism services have become a major revenue source, attracting millions of visitors and stimulating sectoral growth. The UAE has also made massive investments in advanced technologies, venture projects, and startups, fostering new industries in information technology and renewable energy. Despite limited natural resources, the country has developed agricultural technologies such as hydroponics and vertical farming to increase food production and exports. This comprehensive diversification strategy has allowed the UAE to develop a resilient and competitive economic structure capable of adapting to global market fluctuations. By attracting substantial foreign investment into the technological sector, along with funding from national state funds, the country has created a favorable institutional environment for innovative growth. Between 2005 and 2023, the volume of financial investment nearly tripled, reaching $30.7 billion (Figure 2).

Figure 2

.

In recent years, the UAE has emerged as a global leader in artificial intelligence technologies, data infrastructure, and cloud services. The country launched its National Artificial Intelligence Strategy in 2017, establishing the ambitious goal of becoming a world leader in this innovative economic sector by 2031. Since then, the government has invested billions of dollars, transforming the nation into a modern hub for technological innovation and foreign investment.

A key trend observed over the past two decades has been the declining share of natural resource rents in the gross domestic product of Persian Gulf oil-producing nations. Among these countries, the UAE exhibits one of the lowest indicators in the region, currently standing at approximately 17.6% (Table 4). Its successful reduction of economic dependence on resource extraction offers valuable insights for other oil-producing countries like Kazakhstan. Kazakhstan initially showed similar trends in reducing resource dependence; yet, recent years have witnessed a reversal of this progress.

Table 4

YearUnited Arab EmiratesKuwaitOmanSaudi ArabiaMiddle East and North AfricaOECD membersKazakhstanWorld
200022.451.446.442.724.70.927.32.2
200117.644.139.734.620.20.821.02.0
200216.238.136.532.419.60.623.11.8
200319.240.636.238.021.80.822.92.0
200422.246.939.743.625.90.928.32.5
200525.354.146.349.931.81.230.33.2
200627.251.844.650.832.71.128.83.5
200724.948.841.448.530.01.126.53.6
200827.753.540.555.033.81.633.25.0
200919.739.634.035.821.90.821.62.8
201023.848.835.238.924.91.121.73.7
201129.859.143.350.230.61.425.84.8
201228.258.140.448.529.81.122.04.1
201327.456.338.845.528.41.018.23.7
201424.054.034.341.325.70.917.33.2
201514.037.321.124.915.40.49.31.7
201611.832.418.120.713.00.411.01.6
201714.336.821.424.516.30.614.92.0
201818.245.227.029.322.10.820.82.5
201916.939.825.025.518.90.717.92.2
202012.029.318.917.312.70.512.81.5
202117.6n. a.29.225.618.61.426.83.0

Total natural resource rents (% of GDP).

Source: World Bank Group (2025).

The UAE has shifted from exporting crude oil to producing high value-added products across multiple industrial sectors. These include the chemical and electrical industries, construction, and machinery and equipment production. The UAE has now established a comprehensive innovation ecosystem that supports both startups and investors.

The Department of Economic Development in Abu Dhabi implemented the “Made in Abu Dhabi” national branding initiative to enhance product reliability and quality. This $100 billion trade initiative exemplifies the strategic use of policy and diplomatic tools for economic diversification. The program mandated the inclusion of the “Made in Abu Dhabi” brand on all industrial licenses issued to factories and manufacturing companies in the city.

To assess development prospects for the UAE, the study developed an econometric model accounting for heteroskedasticity. This model evaluates several critical dimensions: the role of energy markets, innovation economies, the impact of international relations, trade diplomacy, sustainable development, and renewable energy transition.

Heteroskedasticity refers to a regression analysis condition where the error variance is non-constant. This phenomenon can yield inefficient coefficient estimates and incorrect conclusions about the significance of variables. Various correction methods address this issue, including heteroskedasticity-corrected models. Using the collected UAE research data, the study derived the key parameters of the model (Table 5).

Table 5

VariablesParameters
CoefficientStd. Errort-ratiop-value
Const692.2821,552.510.44590.6607
Oil production in the UAE, million tons194.33615.485312.55<0.0001***
World crude oil prices ($/barrel), average295.6705.5626053.15<0.0001***
Fuel exports (% of merchandise exports)−24.74837.58960−3.2610.0041***
Population (million), total−793.415198.755−3.9920.0008***

Heteroskedasticity-corrected model, using observations 2000–2023 (T = 24), dependent variable: GDP per capita (current US$).

***p < 0.001; **p < 0.01; *p < 0.05.

The independent variables incorporated into the model demonstrate high statistical significance. This is evidenced by p-values below the conventional threshold of 0.001. The reliability of the regression equation is further substantiated through the comparative analysis of statistical criteria presented in Table 6.

Table 6

Statistical indicators and evaluation criteria
Calculated based on original dataMean dependent variable42,154.85
Sum of squared residuals14,826,146
S.D. dependent variable7,860.435
Standard error of regression883.3592
Calculated based on weighted dataSum of squared residuals83.60967
R-squared0.996807
Fisher’s criterion (4, 19)1,482.796
Standard error of regression2.097739
Adjusted R-squared0.996135
p-value (F)2.04e−23
Akaike criterion108.0636
Hannan-Quinn109.6263
Durbin-Watson1.693051
Log-likelihood−49.03179
Schwarz criterion113.9538
rho0.152258

Statistical evaluation of regression reliability.

The first model (S1 and S2) assumes sustainable development while maintaining current high oil production levels alongside alternative growth in high-technology exports (Table 7). The second forecast scenario (M1 and M2) presents a moderate growth pathway featuring a 20% reduction in oil production coupled with a compensatory expansion in high-technology exports. More complex scenarios emerge in the third model (C1 and C2), which examines crisis conditions involving a double reduction in oil output. Nevertheless, the model suggests an alternative trajectory of growth in high-technology exports.

Table 7

ModelDeterminantsScenario 1Scenario 2Scenario 3Scenario 4Scenario 5
S1Maximum oil production in the UAE, million tons200200200200200
World crude oil price ($/barrel), average10080604020
Fuel exports (% of merchandise exports)6858483828
Sustainable population (million), total10.510.510.510.510.5
GDP per capita (current US$) - Forecast62,478.556,317.650,156.743,995.937,835.0
S2High-technology exports (million current US$)3,417.66,835.113,670.227,340.554,681.0
GDP per capita (current USD) with growth in the share of high-technology exports - Outlook62,804.056,968.651,458.746,599.743,042.7
M1Moderate reduction in UAE oil production by 20%, million tons160160160160160
GDP per capita (current US$) - Forecast54,705.148,544.242,383.336,222.430,061.5
M2High-technology exports (million current US$)3,417.66,835.113,670.227,340.554,681.0
GDP per capita (current USD) with growth in the share of high-technology exports - Forecast54,726.448,586.942,468.736,393.330,403.3
C1Moderate reduction in UAE oil production by 50%, million tons100100100100100
GDP per capita (current US$) - Forecast43,044.936,884.030,723.124,562.318,401.4
C2High-technology exports (million current US$)3,417.66,835.113,670.227,340.554,681.0
GDP per capita (current USD) with growth in the share of high-technology exports - Forecast43,079.136,952.430,859.824,835.718,948.2

Predictive scenarios for various economic and energy strategy vectors in the UAE.

An examination of these models and five development scenarios revealed distinct economic outcomes. Under the first scenario (Model S1), which maintains traditional economic structures and favorable oil market conditions, GDP per capita would reach $62,478.5. This projection assumes maximum annual oil production of 200 million tons and current oil export revenues constituting 68% of GDP. The second variant of this model, while maintaining existing high-technology export volumes, projects GDP per capita growth to $62,804.0. Subsequent scenarios (second through fifth) incorporate declining global oil prices and reduced petroleum export revenues, which would adversely affect per capita GDP indicators. These negative impacts could be mitigated by doubling high-technology export values—a compensatory measure integrated into each of the following scenarios.

Models M1 and M2 propose a moderate policy of reducing dependence on oil resources, with a decline in annual production to 160 million tons. Models C1 and C2 are crisis-oriented and foresee a reduction in oil production to 100 million tons per year. An analysis of these models indicates that a sharp departure from resource dependence poses economic challenges in the short term. However, in the medium and long term, this path appears to be the most favorable if efforts to advance high-technology exports are intensified.

To assess more uncertain factors—such as geopolitical conflicts and the pace of technological innovation—and to optimize the assumptions of the regression model while improving its accuracy and reliability, a multivariate time series model of the VECM type was developed. Given the presence of cointegration among several variables, particularly between exports, GDP, and oil production, the VECM approach is preferable for accurately interpreting long-term effects. This made it possible to analyze the internal interrelations and long-term development of the country using three endogenous variables (Merchandise Exports, GDP, Oil Production) and two exogenous variables (World Crude Oil Price, Energy Intensity).

The endogenous variables were included in the model to evaluate the joint dynamics and cointegrating relationships: Merchandise Exports (current million US$), GDP (current million US$), and Oil Production (million tons). These three variables are linked in a long-term equilibrium relationship (cointegration) and interact within the system, demonstrating adjustment through exports and GDP.

The exogenous variables were introduced as external shocks/regressors: World Crude Oil Price (US$/barrel) represents a determining global price often treated as exogenous for a single economy, while World Energy Intensity (EJ/$T) serves as a global indicator of energy efficiency and consumption structure, typically an exogenous regressor for national economies. The resulting VECM system is presented in Table 8.

Table 8

VECM system, lag order 1
Maximum likelihood estimates, observations 1971–2023 (T = 53)
Cointegration rank = 1
Case 3: Unrestricted constant
beta (cointegrating vectors, standard errors in parentheses)
GDPcurrentmillio~ 1.0000
(0.00000)
Oilproductionmil~ −372.10
(172.75)
Merchandiseexpor~ −0.49347
(0.048399)
alpha (adjustment vectors)
GDPcurrentmillionUS −0.89068
Oilproductionmilliontons −6.0868e−005
Merchandiseexportscurrentmi −0.77782
Log-likelihood = −1,341.4384
Determinant of covariance matrix = 1.9350877e+018
AIC = 51.4128
BIC = 52.1935
HQC = 51.7130
Equation 1: d_GDPcurrentmillionUS
CoefficientStd. Errort-ratiop-value
const−8.60977e+061.41009e+06−6.106<0.0001***
Worldcrudeoilpricebarrel1,245.79159.7977.796<0.0001***
WorldEnergyIntensityEJT1,962.77420.4094.669<0.0001***
Data4,294.67704.4926.096<0.0001***
EC1−0.8906830.126911−7.018<0.0001***
Mean dependent var9,687.630S.D. dependent var26,202.93
Sum squared resid1.38e+10S.E. of regression16,966.11
R-squared0.613008Adjusted R-squared0.580758
rho0.167318Durbin-Watson1.663624
Equation 2: d_Oilproductionmilliontons
CoefficientStd. Errort-ratiop-value
const−1,081.09675.342−1.6010.1160
Worldcrudeoilpricebarrel0.02797080.07653230.36550.7164
WorldEnergyIntensityEJT0.4150600.2013492.0610.0447**
Data0.5401360.3374071.6010.1160
EC1−6.08678e-056.07825e-05−1.0010.3217
Mean dependent var2.909434S.D. dependent var8.164964
Sum squared resid3,169.279S.E. of regression8.125678
R-squared0.085785Adjusted R-squared0.009600
rho0.152615Durbin-Watson1.685614
Equation 3: d_Merchandiseexportscurrentmi
CoefficientStd. Errort-ratiop-value
const−7.81295e+061.94406e+06−4.0190.0002***
Worldcrudeoilpricebarrel1,162.98220.3095.279<0.0001***
WorldEnergyIntensityEJT1,820.75579.6113.1410.0029***
Data3,895.51971.2704.0110.0002***
EC1−0.7778190.174971−4.445<0.0001***
Mean dependent var9,154.396S.D. dependent var29,759.43
Sum squared resid2.63e+10S.E. of regression23,390.86
R-squared0.429729Adjusted R-squared0.382207
rho0.136127Durbin-Watson1.658744
Cross-equation covariance matrix:
GDPcurrentmillionUSOilproductionmilliontons Merchandiseexportscurrentmi
GDPcurrentmillionUS2.6069e+008 59,091.2.9325e+008
Oilproductionmilliontons 59,091.59.798 50,217.
Merchandiseexportscurrentmi2.9325e+008 50,217.4.9552e+008
determinant = 1.93509e+018

Dynamic time series analysis in the UAE.

***p<0.001; **p<0.01.

In this model, beta represents the cointegration vector, indicating the coefficients in the long-term (equilibrium) relationship between the levels of the variables. The value of alpha denotes the adjustment coefficients vector. Each element of alpha reflects how rapidly the corresponding endogenous variable responds to deviations from the long-term equilibrium (i.e., the size of the cointegration error). The adjustment coefficients are as follows: GDP = −0.89068, Merchandise Exports = −0.77782, and Oil Production ≈ − 6.09e−5. A negative sign indicates adjustment toward reducing the cointegration error (the normalization of signs depends on the beta specification). The absolute value indicates the speed of return to equilibrium (for example, −0.89 corresponds to approximately 89% correction per period).

The data analysis confirms the presence of cointegration. The cointegrating relationship can be expressed as GDP + (−372.10)·Oil Production + (−0.49347)·Merchandise Exports = 0 (in data scale). The alpha values show that GDP and exports strongly adjust to disequilibrium (−0.8907 and −0.7778, respectively), whereas oil production exhibits almost no adjustment (−6.09e−5). This indicates a long-term equilibrium restored primarily through GDP and exports, while oil production behaves as a “long-term” variable.

For d_GDP, all regressors are statistically significant (constant −8.61e6, oil price +1,245.79, p < 0.001; Energy Intensity +1,962.77, p < 0.001; Data +4,294.67, p < 0.001). The error correction term (EC1) is strongly negative (−0.8907, p < 0.001), meaning that a negative deviation from equilibrium leads to an increase in GDP in the next period, with an adjustment speed of about 89% per period. The model explains approximately 61% of the variation (R2 = 0.613). The Durbin–Watson statistic equals 1.66, suggesting minor autocorrelation.

For d_OilProduction, few regressors are significant; only World Energy Intensity (0.4151, p = 0.0447) shows a meaningful effect. Oil price and EC1 are not significant, and the coefficient of determination is low (R2 = 0.086), indicating that short-term fluctuations in oil production are poorly explained by the model—consistent with the near-zero alpha for oil production.

For d_MerchandiseExports, the significant variables include the constant term, oil price (+1,162.98, p < 0.001), Energy Intensity (+1,820.75, p = 0.0029), Data (+3,895.51, p < 0.001), and EC1 (−0.7778, p < 0.001). The negative EC1 implies that when exports deviate positively from equilibrium, they adjust downward by approximately 77.8%. The coefficient of determination is R2 = 0.43.

In practical terms, this indicates that the world oil price and global energy intensity are key determinants of short-term GDP and export dynamics. Both indicators show positive associations with these variables in time-series dynamics. Oil production functions primarily as a long-term factor (with a large cointegration coefficient of −372.10), showing minimal short-term responsiveness and weak explanatory power in the regression model. Energy intensity is linked to technological innovation, which acts as an endogenous shock for resource-dependent oil-producing countries by promoting global energy efficiency and reducing oil consumption per unit of GDP.

For the Gulf countries under study (the UAE, Saudi Arabia, Kuwait, and Oman), the VECM results allow for several policy recommendations concerning energy and economic development. Since oil production acts as a strong long-term factor but shows limited short-term adjustment, while global oil prices and world energy intensity significantly influence short-term GDP and export dynamics, national policies should account for the distinction between the long-term role of production and short-term external shocks.

For countries with large reserves and high dependence on oil revenues (Saudi Arabia, Kuwait), a leading priority should be the diversification of the economy and export structure, development of advanced processing industries, and expansion of non-resource sectors to reduce vulnerability to global price fluctuations. It is also essential to channel oil revenues into long-term wealth and infrastructure funds, maintain flexible fiscal policies with transitional funds and budget stabilizers, and strengthen institutional mechanisms for managing oil-derived revenues—ensuring transparency, clear spending rules, and targeted investments in human capital and technology. Collectively, these measures would reduce GDP and export dependence on short-term price shocks, given that the system returns to equilibrium primarily through GDP and exports rather than oil production.

For countries with smaller reserves and more diversified economies (such as the UAE), it is crucial to use oil revenues effectively to accelerate the transition toward high-tech, service-oriented, and clean energy sectors. Renewable energy development and energy efficiency improvements should be prioritized, as global technological progress in energy intensity increasingly affects the world economy by reducing long-term oil consumption per unit of GDP. These measures would help stabilize exports and GDP regardless of oil market shocks. In addition, the formation of trade and investment clusters and greater involvement of the private sector in R&D and clean technologies are recommended.

For countries with significant oil production but slower economic growth and limited diversification capacity (such as Oman), the primary focus should be on gradual diversification, emphasizing value-added activities within the energy sector (refining, petrochemicals), as well as the development of small and medium-sized enterprises, including in tourism. Additional attention should be given to implementing energy efficiency measures, encouraging private investment, and improving vocational training and workforce skills.

The implementation of these measures should be aligned with each country’s key development priorities. For Saudi Arabia and Kuwait, a more targeted approach involving active diversification and institutional reforms in revenue management is required; for the UAE, accelerating the transition toward the service and clean energy sectors is essential; for Oman, gradual diversification focusing on refining and the expansion of small and medium enterprises is of primary importance.

4 Discussion

This research confirms previously established findings regarding the strategic importance of energy policy and diplomacy for sustainable development and national security. An analysis of similar transformational experiences in other countries, particularly those in the Persian Gulf, enables a comparative assessment of successful energy policies and foreign diplomacy approaches.

Current international climate change commitments have led to increasingly stringent global energy policies, while alternative energy systems gain greater competitiveness (; ). Consequently, many oil-producing nations encounter a dual problem in their economic and political systems. The first challenge involves declining efficiency in utilizing natural resource rents, while the second stems from ongoing geopolitical and geo-economic shifts toward Asia. The Persian Gulf states prioritize the implementation of national energy transition policies, albeit with varying degrees of success. These policies focus on transforming hydrocarbon industries, adopting renewable energy sources and technologies, diversifying economies, and entering into new markets (). Conceptual debates increasingly emphasize the importance of studying effective practices and approaches when formulating energy policies. Such analysis is necessary to move beyond the simplified dichotomies prevalent in discussions about sustainability transformations and green energy transitions (Zumbraegel, 2024). Energy security has emerged as a critical global concern, particularly due to geopolitical instability and supply chain disruptions ().

The fundamental features of modern international politics are shaped by carbon energy systems. This influence stems from the socio-environmental practices and processes through which this essential resource has been exploited and converted into economic benefits (). Energy systems have long served as vital elements of diplomacy and foreign policy due to their growing influence on national security and economic stability. These three concepts maintain an ontological hierarchy where national security represents the broadest framework, with energy diplomacy constituting a narrower definition (). Public support for energy policies proves crucial when developing effective climate mitigation measures and achieving net-zero emission targets ().

This study differs from similar research examining the economic impact of renewable energy sources on the UAE economy through annual time series analysis. It employed a more targeted selection of indicators and contemporary econometric methods. The primary variables include renewable energy consumption, GDP per capita, capital, employment, trade, inflation rate, interest rate, fixed exchange rate, foreign direct investment, and trade openness from 2010 to 2020. The current investigation covers an extended data period from 2000 to 2023 and incorporates additional target metrics: oil production in the UAE; world crude oil price ($/barrel); fuel exports (% of merchandise exports); and population (million). Previous researchers initially utilized the Autoregressive Distributed Lag (ARDL) model to assess long-term relationships between variables, encountering multicollinearity issues that revealed correlations among independent variables. They subsequently applied an alternative Ordinary Least Squares (OLS) approach to measure connections between renewable energy sources and the UAE economy (). In contrast, the present study utilized the heteroskedasticity-corrected regression model as a more effective method for conducting multivariate computational analysis and economic modeling. This regression technique ensures more precise and reliable analytical outcomes by implementing corrections based on the specific nature of the model’s heteroskedasticity. The methodology effectively addresses unequal variance, guaranteeing that the model maintains consistent goodness-of-fit across all observations.

Another comparative study examining alternative approaches to transitioning from resource dependence to a diversified economy suggests that urbanization and economic development in the UAE reduce environmental pressure. While this perspective merits partial agreement, the current research demonstrates that national prosperity remains substantially dependent on the oil sector’s influence. An abrupt transition to alternative development models could significantly decrease GDP per capita levels. The study also partially concurs with findings indicating that increased foreign direct investment conversely elevates environmental pollution. Consequently, the formulation of new environmental policies remains imperative for promoting sustainable business strategies, implementing eco-conscious practices, and enhancing nationwide environmental awareness. Expanded adoption of clean energy technologies should further contribute to reducing the economy’s overall energy intensity while supporting carbon neutrality objectives ().

Most Arab states, with the exception of the UAE, maintain unitary systems of government. Therefore, their national policies often exhibit strong centralization, which may not always adequately account for local economic, political, and cultural needs. This situation stems from multiple factors, including poverty, insufficient institutional capacity to address the complexities encountered by local communities, or country-specific circumstances that vary across cases ().

The comparative analysis revealed pronounced parallels between the experiences of the UAE and other nations in energy and economic policy approaches. Saudi Arabia, for instance, has committed to achieving net-zero greenhouse gas emissions by 2060. Through its Vision 2030 program, the country aims to derive 50% of its energy from renewable sources while reducing CO2 emissions by 278 million tons by 2030. This strategic roadmap emphasizes international economic diversification, global diplomatic engagement, and improvements in the quality of life (; ). The UAE’s diversification experience offers valuable insights for resource-dependent economies like Kazakhstan. Over the past two decades, Kazakhstan has developed its economy primarily through raw material exports, particularly fossil fuels. While this approach generated substantial economic gains, such achievements largely resulted from a global commodity supercycle—rising prices on global raw material markets. Reliance on this singular growth model proved unsustainable long-term, necessitating new strategies to reduce external financial dependencies and diversify Kazakhstan’s economic foundations (Bibi, 2024). The service sector should constitute a core element of diversification strategies for resource-dependent nations. Enhancing this sector not only improves petroleum industry efficiency but also increases fiscal revenues from oil rents. These conclusions derive from an analysis of Kazakhstan’s economic conditions, while the UAE’s effective service sector expansion provides empirical validation ().

Policymakers and global experts consider “clean” hydrogen to be a promising solution for addressing the climate crisis. Several major oil and gas exporting countries share this optimism and are investing substantial resources in hydrogen infrastructure to position themselves as future global hubs. Countries such as Oman, Saudi Arabia, and the UAE hold particularly advantageous positions, benefiting from strategic advantages compared to other hydrogen-producing regions in the Global South (Zumbraegel, 2025).

There is also broad agreement that multilateral relations in energy diplomacy more effectively enhance long-term energy security and economic prosperity for individual states by strengthening international connections related to energy consumption and supply. This perspective is also reflected in the present study. Just as in the case of other Gulf states, a principal challenge for the UAE’s energy diplomacy amid the transition to a low-carbon economy is the creation of new business models to monetize hydrocarbon resources. Concurrently, it is imperative to ensure that economic diversification strategies effectively reduce reliance on oil export revenues (Griffiths, 2019).

5 Conclusion

The global transition to renewable energy systems has acquired critical importance in contemporary contexts. This shift requires Gulf countries to consider not only domestic resources but also external demand trends and the influence of emerging technologies when shaping their energy policies. Accordingly, proposed national strategies should align with global decarbonization objectives and adapt to the evolving structure of world demand for hydrocarbons.

The recommendations developed for Saudi Arabia and Kuwait emphasize the formulation of proactive energy policies focused on economic diversification and the strengthening of institutional mechanisms for managing oil revenues. For the UAE, accelerating the transition toward a service-oriented and clean energy economy is advantageous. For Oman, consistent economic diversification through the development of advanced oil refining and support for small and medium-sized enterprises is advisable.

The choice of policy instruments and the pace of implementation should correspond to each country’s fiscal capacity and social priorities. Moreover, all national development programs should incorporate mechanisms for monitoring effectiveness and adapting to external global challenges.

The case study of UAE and other Persian Gulf countries energy policy and diplomacy incorporated a methodological approach combining qualitative and quantitative methods energy policy and diplomacy, as well as strategies employed by other countries, vividly demonstrates the global significance of these processes. The research data reveal that the UAE has consolidated its position in global markets as an innovation-driven ecosystem and a prime location for both established and emerging technology companies. This achievement stems from sustained investments in digital infrastructure and the implementation of supportive regulatory frameworks that foster an enabling environment for innovation, growth, and alternative energy advancement.

The comprehensive examination of economic transformations and related political and diplomatic processes in the UAE made it possible to construct predictive models and scenarios. The analysis elucidated potential progress trajectories and their implications for the UAE. The case under study exemplifies how integrating technological solutions and sustainable practices into contemporary energy policy can simultaneously drive economic progress and enhance international standing. The study further underscores the critical role of global diplomatic initiatives in establishing knowledge and technology transfer partnerships, which constitute a pivotal factor in contemporary evolutionary paradigms. Diversification policies have led to positive economic outcomes, with GDP expanding from $104.3 billion in 2000 to $514.1 billion in 2023. Concurrently, investment inflows nearly tripled, reaching $30.7 billion.

The world oil price and global energy intensity substantially determine short-term fluctuations in the UAE’s GDP and exports. An analysis of their dynamics indicates a positive correlation with a temporal lag. Oil production primarily functions as a long-term factor (with a cointegration coefficient of −372.10), yet in the short term, it exhibits minimal responsiveness and is poorly explained by the current model regressors. Changes in energy intensity reflect technological innovation, which acts as an endogenous shock for resource-dependent economies. In this case, the effect is explained by the global increase in energy efficiency, which reduces oil consumption per unit of GDP and shifts demand toward hydrocarbons.

An analysis of the proposed short-term economic development models for the UAE indicates that the gradual expansion of high-value-added sectors represents the most effective strategy for transitioning from resource dependence to an innovation-driven economy. Projections suggest that this approach will prove particularly advantageous in the medium- and long-term perspectives, especially when coupled with accelerated growth in high-technology exports. The practical applicability of these research findings lies in their potential utilization for studying other resource-dependent nations and formulating recommendations for economic diversification.

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Data availability statement

The original contributions presented in the study are included in the article/supplementary material, further inquiries can be directed to the corresponding author.

Author contributions

AI: Investigation, Conceptualization, Writing – original draft, Writing – review & editing. YC: Supervision, Methodology, Formal analysis, Writing – original draft, Data curation. OM: Writing – review & editing, Project administration, Visualization, Validation, Resources, Funding acquisition.

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The author(s) declare that no financial support was received for the research and/or publication of this article.

Conflict of interest

The authors declare that the research was conducted in the absence of any commercial or financial relationships that could be construed as a potential conflict of interest.

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The authors declare that no Gen AI was used in the creation of this manuscript.

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Summary

Keywords

innovation, alternative energy, model, diversification, technology-driven economy

Citation

Ilyassov A, Chukubayev Y and Morgunova O (2025) Energy policy and diplomacy of the UAE and other resource-oriented countries in the transition to technological development. Front. Polit. Sci. 7:1661283. doi: 10.3389/fpos.2025.1661283

Received

07 July 2025

Revised

29 October 2025

Accepted

14 November 2025

Published

28 November 2025

Volume

7 - 2025

Edited by

Subbulakshmi Ganesan, Jain University, India

Reviewed by

Shashi Bhusan Kr Vishwakarma, Pondicherry University Department of Politics and International Studies, India

Xuming Qian, Shanghai International Studies University, China

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© 2025 Ilyassov, Chukubayev and Morgunova.

This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY). The use, distribution or reproduction in other forums is permitted, provided the original author(s) and the copyright owner(s) are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.

*Correspondence: Alisherbek Ilyassov,

Disclaimer

All claims expressed in this article are solely those of the authors and do not necessarily represent those of their affiliated organizations, or those of the publisher, the editors and the reviewers. Any product that may be evaluated in this article or claim that may be made by its manufacturer is not guaranteed or endorsed by the publisher.

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