Assessment 2: Research Project (35%) This assignment is designed to develop skills in assessing market information and presenting clear written communication about economic outcomes in markets, as...

ASSESSMENT 2: RESEARCH PROJECT
(CHOSEN TOPIC: Research Topic 2)
Table of Contents
Introduction    3
Describing the Solow Growth Model    3
The Relationship in the Diagram    4
Economic Status of the UAE in the Previous Years    4
Impact of Solow Growth Model on the Innovation in UAE    6
New Technological Implications    6
New Standards of Business    6
Advanced Communication for Research    7
Reduction in Capital Dissipation    7
Impact of Solow Growth Model on the Technology in UAE    7
New Companies Developed    7
Global Companies set up in the UAE    8
Innovation as a Result of Technology    8
Improved Constant Returns-to-scale (CRS)    9
Economic Progress Evident    9
Per Capita Income Improvement    9
New Businesses and Investments    9
GDP Improvement    10
Improvement in Education    10
Vision 2021 Programme in UAE    10
Conclusion    11
Bibliography    12
Introduction
Every country has economic growth, whether it is slow or fast. The economic growth of a country based on Gross Domestic Product or GDP, per people’s income, taxes can increase or decrease. Economic growth is the enhancement of the market value of the goods and services, which can be adjusted by the inflation[footnoteRef:2]. These increases of goods and services’ price can be produced by the economic overtime in a country. The economic growth is measured in the percentage rate of increment of a country’s original Gross Domestic Product, which is also known as the real GDP of a country. Here, in this report, the UAE has been chosen as the country, whose economic growth would be analysed on the basis of the Solow Growth Model of economy. [2: Wilson, Reginald. "Conditional Convergence: Evidence from the Solow Growth Model." Journal of Applied Business and Economics 19, no. 6 (2017).]
Describing the Solow Growth Model
The Solow Growth Model is a model of economy, based on the population of the country. This Solow Growth Model also analyses the economic output. The results of changes in the population of a country have also been analysedbased on economic over time, which leads to the economic growth of that country[footnoteRef:3]. Demographics can be influenced by the Solow Growth Model of economy. [3: Solow, Robert M. "Resources and economic growth." The American Economist 61, no. 1 (2016): 52-60.]
Figure 1: Solow Growth Model of Economy
The Solow Growth Model of the economy can be described by assumptions. The population of a country grows at a certain rate over the years. So the cu
ent population of the country (N) and the future population (N’) are linked with the population growth equation N’= N(1+G). If the cu
ent population is 100 and the rate of growth of the population is 3%, then the future population will be 103.
All consumers, which they earn save a certain percentage of their income (S) and the rest, are consumed by them. So the consumption (C) and the income (Y) are linked by the equation {C= (1+S)Y}.
All firms in the economic market of a country produce the outputs (Y) by using the same technology, which need labour (L) and capital (K). The equation is Y= aF(K,L).
Present capital stock (K), future capital stock (k’), the rate of capital depreciation (d) and the level of capital investment (L) are linked with the equation of capital accumulation {K’=K(1-d)+L}.
The Relationship in the Diagram
The production function takes the formation of Y=akbL1-b where 0
1
The output per worker is y=akb where y=Y/L
The income expenditure is Y=C+L
Consumers’ budget is Y=C+S
The capital accumulation is K’=(1-d)K+sY
So the capital accumulation per worker is (1+g)k’ = (1-d)k+sy = (1-d)k + saf(k) = (1-d)k + sakb.
The economic growth of the UAE by the help of Solow Growth Model is influenced by the population of the UAE. The demographics of the UAE are also dependable on the economy of the UAE[footnoteRef:4]. The UAE demographics are the socio economic characteristics of the population of the UAE. The Solow Growth Model of the economy of the UAE describes the changes inthe level of output in the UAE’s economy. It also changes the population growth rate, per capita income rate, the savings rate of the people and the technological progress rate in the UAE. [4: Wilson, Reginald. "Conditional Convergence: Evidence from the Solow Growth Model." Journal of Applied Business and Economics 19, no. 6 (2017).]
Economic Status of the UAE in the Previous Years
Before the discovery of oil in the UAE, the GDP of this country was 49 million[footnoteRef:5]. Dubai has certainly planned free market capitalism as described by the International Herald Tribune. Dubai’s revenue comes from the oil. The revenues that come from the oil industry, petroleum and natural gases are less than 10% of whole Emirate’s GDP [footnoteRef:6]. Initially the Dubai’s economy set up on the trading of oil.. Dubai maintained its importance on the trading from 1970s[footnoteRef:7]. The GDP has increased so much from the previous years in the UAE. The discovery of oil has changed so much in the UAE. [5: Zhong, Yue, and Wenyi Huang."Spatial Dynamics for a Generalized Solow Growth Model." Discrete Dynamics in Nature and Society 2018 (2018).] [6: Zhang, Wei-Bin."Growth, Residential Distribution, and Land Price in an Integrated Solow’s Growth and Alonso’s Residential Model." Asian Themes in Social Sciences Research 2, no. 1 (2018): 23-31.] [7: Moradi, Mohammad Ali, and MeysamKe
yaee. "Impact of information and communication technology on economic growth in selected Islamic countries." Quarterly Journal of New Economy and Commerce (2010).]
The country becomes developed, the lifestyles of the residents has changed a lot. GDP based on the per capita income has increased as the oil industry open lots of opportunities in the young generation to job.Now the GDP of the UAE is 120 million, which leads the country to be rich and successful[footnoteRef:8].The GDP has become a lot in the UAE as the people have money to buy and consume the services and products. Nevertheless, the GNP means Gross National Product has also increased from the previous years as well. The GNP of the UAE was averagely 205 USD from 1993 to 2005. However, cu
ently the GNP of the UAE has increased to the 417 USD from the past[footnoteRef:9]. [8: Rahman, Md Saifur, and FarihanaShahari. "The nexus between financial integration and real economy: Solow-growth model concept." Research in International Business and Finance 42 (2017): 1244-1253.] [9: Zhang, Wei-Bin."Growth, Residential Distribution, and Land Price in an Integrated Solow’s Growth and Alonso’s Residential Model." Asian Themes in Social Sciences Research 2, no. 1 (2018): 23-31.]
Before discovering the oil and setting up oil industry, the people of UAE...