Manufacturing as the Next Growth Engine for the UAE Economy
The UAE is placing manufacturing at the heart of its economic diversification strategy — signalling a shift from being primarily an oil- and services-driven economy to one that fosters high-value industrial production, innovation and exports.
Strategic Backdrop
Under the umbrella of the national programme Operation 300bn (launched in 2021) the UAE aims to raise the industrial sector’s contribution to the nation’s GDP to AED 300 billion by 2031.
Commenting at the Sharjah Investment Forum – World Investment Conference 2025, veteran investor and entrepreneur Mohamed Alabbar noted that while real-estate makes up roughly 12 % of GDP, manufacturing has reached around 15 % — and is poised for further growth.
Recent data show that industrial exports hit AED 197 billion (US$54 billion) in 2023 — a 9 % increase year-on-year — and that in 2024, exports soared further, driven by high-technology, aerospace, clean-energy manufacturing and localisation efforts.
Focus Areas & Investment
The manufacturing push covers so-called “sunrise industries” such as advanced electronics, aerospace, batteries/energy storage, clean-energy equipment, as well as more traditional manufacturing domains including chemicals, metals, construction equipment, plastics and rubber.
To support this, the UAE has committed over AED 40 billion (roughly US$11 billion) over the next five years to advanced manufacturing and localisation of over 4,800 products — part of the drive to reduce import-dependence and boost in-country value (ICV).
Other enablers include:
- Launch of funds and financing platforms (e.g., a US$272 million “Emirates Growth Fund” for tech-driven SME industrial expansion).
- Strengthening of localisation programmes, procurement policies favouring domestic manufacturing, and industrial-spoke export platforms.
- Export growth: industrial exports increased by ~68 % from 2021 to 2024, signalling strong global demand for UAE-manufactured goods.
Why This Matters
- Diversification & resilience: Manufacturing creates a more stable economic base than commodity-driven sectors, helping the UAE mitigate oil‐price volatility.
- Job creation & value-chain development: Manufacturing boosts high-skilled employment, builds domestic capabilities and anchors supply chains locally rather than relying purely on imports.
- Global competitive positioning: With strategic location between Asia, Africa and Europe, the UAE is aiming to be a manufacturing and logistics hub connecting east-west trade. Combined with trade agreements and industrial parks, this gives a competitive edge.
- Technology convergence: Modern manufacturing is increasingly tech-enabled (automation, robotics, Industry 4.0, digital twins). The UAE’s manufacturing drive aligns with its ambition in advanced technology, making it not just about scale but about smart production.
- Sustainability & future industries: The shift also aligns with global trends: clean energy, decarbonisation, advanced materials, batteries, aerospace — all of which tie into manufacturing capability.
Challenges & Considerations
- Building a full ecosystem (skills, suppliers, R&D) is a multi-year project. While high-level targets are ambitious (e.g., GDP contribution by 2031), execution will require sustained effort across policy, talent, infrastructure and investment.
- Global competition in manufacturing is intense — the UAE must differentiate (via location, logistics, regulatory environment, value-add) rather than simply “compete on cost”.
- Ensuring local supply-chain depth (not just assembly) is vital. Long-term competitiveness often hinges on upstream components rather than just finished products.
- Skills & workforce: High-tech manufacturing demands specialised skills; investment in talent and workforce development will be critical.
- Integration with global value chains: Manufacturing alone doesn’t guarantee success — connecting to global markets, exports, trade flows and differentiation matter.
What to Watch
For business, investment and tech readers, some key metrics and areas to keep an eye on:
- Growth in manufacturing’s share of GDP (from ~15 % toward targeted levels).
- Volume and value of industrial exports (especially in high-tech sectors).
- Number of localisation/ICV deals, offtake agreements for domestically produced goods.
- Investments in manufacturing-tech: automation, robotics, smart manufacturing facilities.
- New manufacturing facilities (especially in advanced industries: semiconductors, energy storage, aerospace) being set up in the UAE.
- Regulatory and incentive frameworks: incentives for manufacturing, procurement mandates, free-zone manufacturing clusters.
- Suggested Headline & Sub-heading
Headline: Manufacturing Will Power the UAE’s Next Wave of Economic Growth
Sub-heading: With AED 40 billion committed to advanced manufacturing, the UAE is doubling down on localisation, exports and tech-driven industry to shift beyond oil-reliant growth.
