The UAE outperforms global counterparts in dimensions of income and infrastructure, BCG study reveals

Dubai: The United Arab Emirates (UAE) is in the top quartile globally when it comes to well-being, according to a new report by The Boston Consulting Group (BCG), Striking a Balance Between Well-Being and Growth: The 2018 Sustainable Economic Development Assessment, which is being released today. The UAE outperforms other GCC countries, as well as the rest of the world, in several dimensions including infrastructure and governance, but is losing ground in education.

The report found that wealthier countries show higher well-being levels; overall, the UAE’s well-being performance is good but losing ground. The country is below global average when it comes to converting wealth into well-being, and of countries with a similar starting level of well-being, the United Arab Emirates is in the 3^rd quartile of change.

The finding runs counter to conventional wisdom that countries must make trade-offs between policies that support economic growth and those that elevate the well-being of their citizens. The research, based on BCG’s proprietary  Sustainable Economic Development Assessment (SEDA), a comprehensive diagnostic tool that assesses the relative well-being of countries, reveals that there is actually a virtuous cycle between well-being and growth in which gains in one power progress in the other.

“BCG has been a strong advocate of the need for countries to focus policies and development strategies on improving well-being,” notes Joao Hrotko, a BCG partner and coauthor of the report. “But there remains a belief that policies aimed at improving well-being may lead to weaker GDP growth. Our analysis finds this tradeoff can be avoided. In fact, an approach that balances both well-being and growth is not just advisable under normal circumstances—it is equally important during times of crisis. In such periods, countries must resist the temptation of pursuing policies that come at the expense of promoting well-being.”

The UAE is good and improving in the dimensions of employment and infrastructure, and weak but improving in health, economic stability and governance. Conversely, the country is good but losing ground in income – it continues to outperform global counterparts in this dimension – and is weak and losing ground in education, civil society equality and environment.

“When compared with GCC counterparts, the UAE performs better in all dimensions except education, and to a lesser extent economic stability and health,” said Alexander Tuerpitz, Partner and Managing Director at BCG Middle East. “For countries that already enjoy a relatively high level of well-being, our analysis points to the importance of prioritizing education and employment. Progress in these mutually reinforcing areas can better prepare citizens—and therefore society as a whole– for the challenges presented by globalization and relentless technological change.”

UAE Performance Over the Past 10 Years

“The UAE has dropped two places in the SEDA rankings between 2009 and 2018. However, over the last ten years, the country’s ability to convert wealth into well-being has remained relatively stable, and remains below the global average,” said Tuerpitz.

In the last decade, the UAE has improved most in the dimension of infrastructure at 18 points, followed by economic stability and governance at 8 points each, employment and environment at 3 points each, and health at 2 points. The aspects in which the UAE has seen a drop in the last decade are equality and civil society at negative 2 points, income at negative 4 points and education at negative 9 points.

Addressing Barriers to Progress

The report also examined which areas, or “dimensions”, seemed to be critical to making progress relative to peers—and how the importance of a dimension might differ depending on a country’s level of development.

• Among countries starting with a low level of well-being, the dimensions that differentiated those that made significant improvements in well-being from those that did not were education, infrastructure and governance.
• Among countries with high levels of well-being, the dimensions that differentiated those that made weak improvements in well-being from those that posted good progress were employment and education.

Certainly, there is no blue print for development and each country’s circumstances require different policy responses. However, these results yield an important insight for policymakers: the dimensions that distinguish countries that performed better are areas that, if overlooked, can become bottlenecks and constrain progress.

Well-Being Improves Around the World 

The 2018 analysis also assessed the overall direction of absolute well-being around the globe by looking into data for the 40 metrics that make up the SEDA composite measure—finding reason for optimism.

“Looking at the most recent ten-year period it is clear well-being has generally improved around the world,” says Enrique Rueda-Sabater, a senior BCG advisor and co-author of the report. “This is encouraging – particularly given the fact that this period included a major financial crisis that triggered recessions in many countries.”

In particular, there were significant gains in key health outcomes, education and infrastructure from 2007 through 2016. Although trends were less encouraging in governance and environment, overall most countries showed improvement in a majority of SEDA’s 40 composite metrics.