The United Arab Emirates is a constitutional federation of seven Emirates (Abu Dhabi, Dubai, Sharjah, Ras Al Khaimah, Ajman, Umm Al Qaiwain and Fujairah) that formally federated in 2 December 1971. Since that time, the UAE has developed rapidly into a nation with modern infrastructure and a high standard of living.
The UAE has the world's fifth largest conventional oil reserves and fifth largest natural gas reserves and is the Middle East's second largest economy, after Saudi Arabia.
UAE economy relys on its huge oil and gas reserves to underpin its economic development. Investment income is also substantial and provides a further element to economic activity. An open economic system, free movement of capital and financial stability have also contributed. Government support through provision of incentives and subsidies, along with a high level of government expenditure in housing, have also played an important role.
Although only the second largest Emirate in physical size after Abu Dhabi (the capital), Dubai is a major centre for global commerce, not only for the UAE, but for the entire Gulf region. During the last 40 years, this port has developed into one of the most economically vibrant and tolerant locations to live in the Gulf. As a result of international trade, Dubai maintains a cosmopolitan atmosphere where many people coexist amicably.
Dubai Emirate has exerted a range of diversification efforts to establish itself as a tourism, re-export and financial hub. Taking full advantage of its position near the head of the Gulf, it has become the key regional entrepot. Dubai has developed prestige hotels, massive port facilities and a range of free trade zones to attract both manufacturing and services industries.