This chapter examines trends in foreign direct investment (FDI) in the United Arab Emirates (UAE) by sector and Emirate, and analyses how FDI contributes to sustainable development priorities, including productivity and innovation, digital transformation, job creation and skills development, gender inclusion, and the low-carbon transition. It highlights how FDI supports economic diversification objectives and discusses its role in advancing the transition towards a more knowledge-based, technologically advanced and diversified economy.
Investment Policy Perspectives in the United Arab Emirates
Abstract
FDI plays a central and growing role in the UAE economy, which has been enabled by sustained investment climate reforms. Since the early 2000s, successive liberalisation measures, such as eased foreign ownership restrictions, free zone development and the conclusion of Comprehensive Economic Partnership Agreements (CEPAs), have supported a sharp increase in inward FDI. FDI stock has risen from negligible levels in the early 2000s to over half of GDP by 2024, exceeding the Gulf Cooperation Council (GCC) average and approaching OECD levels. In parallel, FDI inflows as a share of GDP now far surpasses GCC levels and exceeds the average for OECD economies.
Foreign investment has been heavily concentrated in domestic market services, notably wholesale and retail trade and real estate, which together attract around half of total inward FDI stock but exhibit only moderate labour productivity and limited scope for technology diffusion or export activity]. By contrast, higher-value and knowledge-intensive activities, particularly ICT-enabled, scientific and professional services, remain comparatively underrepresented in the FDI stock, constraining the extent to which foreign investment contributes to broad-based productivity upgrading. Recent investments into technology-intensive areas suggest a gradual broadening of the foreign investment base.
Greenfield FDI (i.e. new establishments by foreign companies) is a subset of total FDI that has increasingly aligned with the UAE’s diversification agenda. Over the past two decades, greenfield FDI has shifted toward a broader set of sectors, such as renewable energy, transport and logistics, ICT, and financial and business services, while hydrocarbons still attract around 10% of greenfield FDI in the past decade. This diversification is reflected in the oil sector’s declining share of GDP, from nearly 55% in 1980 to 17% in 2020. R&D investment FDI also increased, supporting gradual innovation upgrading. While levels remain below global innovation leaders, R&D-related FDI in the UAE is increasingly directed toward software, digital services and other technology-intensive activities and is concentrated geographically, with Dubai accounting for around half of all investment in R&D and Abu Dhabi capturing a rising share.
Digital investment has been expanding steadily, particularly in software and IT services, digital platforms and ICT-enabled business services. Digital activities account for a rising share of greenfield FDI, representing around 14% of total flows over 2019-24, above the GCC and MENA averages, reflecting improvements in digital infrastructure and the regulatory environment. Investment is concentrated in digital services, cloud computing and data centres, confirming the UAE’s role as a regional hub for foundational digital technologies. Investment in ICT goods remains relatively limited, reflecting a digital FDI profile that is more service-oriented and less integrated into digital manufacturing value chains.
Greenfield FDI increasingly supports the green transition, but with notable subnational variation. At the national level, renewable energy has emerged as the largest recipient of greenfield FDI, accounting for nearly a quarter of total greenfield FDI in 2014-24, with Abu Dhabi and Dubai accounting for roughly three quarters of this investment. Environmental technologies have also expanded, reaching 8% of greenfield FDI in 2023-24. By 2024, combined greenfield FDI in renewables and environmental technologies surpassed that in fossil fuels, signalling stronger investor alignment with the UAE’s net‑zero ambitions.
Greenfield FDI is a significant driver of job creation, though unevenly across sectors and regions. In terms of job intensity, measured by jobs created per USD billion in greenfield FDI, the UAE surpasses most peer economies selected for this study, generating 2 300 jobs per billion USD. In nominal terms, over a third of FDI-related employment is generated in service sectors such as business services, software, transportation and logistics. Job creation is also geographically concentrated, with Abu Dhabi and Dubai accounting for well over three quarters of FDI-generated employment in the past decade. At the same time, FDI has scope to support greater participation of nationals and women in the labour market, as sectors that employ higher shares of these groups attract relatively little FDI. Ensuring coherence between investment promotion and labour market and human capital policies can help maximize the inclusive spillovers of FDI, without altering its core role in supporting productivity and competitiveness.
Business climate reforms initiated in the early 2000s in the UAE have contributed to a steady rise in the role of foreign direct investment (FDI). In more recent periods since 2020, the UAE has undertaken significant liberalisation of its investment climate, including easing ownership restrictions for most business activities outside of freezones, and expanding market access (Chapter 3). These measures have been complemented by efforts to grant broader national treatment to investors from the Gulf region, further opening the economy to cross-border capital, and the conclusion of Comprehensive Economic Partnership Agreements (CEPA) with a diverse set of economies since 2022, alongside the UAE’s stock of bilateral investment treaties (BITs).
The expansion of free zones offering full foreign ownership, alongside investments in infrastructure and improvements in labour mobility, have further improved the UAE’s investment climate. Since the early 2000s, the UAE has experienced a sharp rise in inward FDI stock, which increased from just 1% of GDP in 2000 to over 50% by 2024 (Figure 2.1, Panel A), surpassing the GCC average of 30% and closely approaching the OECD average of 54% (OECD, 2025[1]; UNCTAD, 2025[2]). FDI inflows as a percentage of GDP also rose dramatically since the early 2000s and now far surpasses GCC levels and exceeds the average for OECD economies (Panel B, Figure 2.1).
Source: UNCTAD, (2025[2]), Foreign direct investment: Inward and outward flows and stock, annual, https://unctadstat.unctad.org/datacentre/reportInfo/US.FdiFlowsStock; OECD, (2025[1]), OECD International Direct Investment Statistics database, https://www.oecd.org/en/topics/foreign-direct-investment-fdi.html
Greenfield FDI (i.e. new establishments of foreign companies) is the largest subset of FDI in the UAE. Patterns of greenfield FDI between 2005 and 2024 show growing support for economic diversification objectives, with greenfield FDI increasingly targeting a broader set of sectors beyond hydrocarbons. In 2025, the UAE has identified several priority sectors for FDI at the national level, including renewable energy, transport and logistics, ICT, financial services and manufacturing, based on a document shared with the OECD. Many of these sectors have already been prioritised by investment authorities at the Emirate level and have correspondingly seen rising shares in greenfield FDI in the past decade.
Renewable energy has emerged as the top recipient of greenfield FDI over the past decade, accounting for over a quarter of total greenfield FDI between 2015 and 2024, which has risen sharply from only 5% in the preceding decade (Figure 2.2). Several other sectors have also attracted more greenfield FDI, including transport (6%), software & IT services (6.5%), and business services (5%), highlighting the rising contribution of knowledge- and service-based activities. While fossil fuels still attracted 10% of greenfield FDI between 2015 and 2024, this represents a modest decline compared to the 12% share observed in the previous decade, likely owing to economic diversification efforts. More broadly, the oil sector’s contribution to GDP declined from nearly 55% in 1980 to 17% in 2020 (FCSC, 2025[3]).
Greenfield FDI by sector (% total greenfield FDI in the UAE), 2005-2024
Source: OECD based on Financial Times (2025[4]), fDi Markets Database, https://www.fdimarkets.com/
2.3.1. Expanding FDI in high-productivity and tradable sectors could strengthen productivity growth
The UAE’s labour productivity performance has plateaued over the past decade, narrowing its early lead relative to high-income peers. Entering the 2000s, with one of the highest productivity levels in the region (USD 161.000 per worker), the UAE benefited from the large contribution of hydrocarbon resource rents to GDP, which raised output per worker in a relatively small labour force. As the economy diversified and employment expanded rapidly, particularly in service sectors, aggregate labour productivity declined through the 2000s and recovered only modestly in the 2010s. By 2024, labour productivity reached around USD 108 000 per worker, above the OECD average and close to the GCC benchmark, but below frontier economies such as Singapore and Ireland (Figure 2.3, Panel A). This trajectory reflects a combination of structural transformation and rapid labour force expansion, with employment growing faster than value added in several large service sectors (IMF, 2023[5]).
The sectoral pattern of employment growth has important implications for aggregate productivity and diversification. Construction, wholesale and retail trade, professional and administrative services, and transportation account for a large share of total employment yet generate substantially lower value added per worker than capital-intensive activities such as finance, real estate and extractive industries. While high labour productivity in capital-intensive sectors partly reflects their technology and factor intensity, the expansion of labour-absorbing services has moderated aggregate productivity gains, even as higher-value activities, particularly financial services, digital and ICT-enabled services, logistics and knowledge-intensive business services, have continued to grow. This pattern is common among fast-growing service-oriented economies, including in the GCC, where employment expansion in services has outpaced productivity growth (IMF, 2023[6]). In the UAE context, it highlights the importance of strengthening productivity within large service sectors and expanding higher-value activities that offer greater scope for learning, upgrading and spillovers. Strengthening firm capabilities, upgrading skills and expanding innovation activity in these sectors will therefore be central to sustaining long-term productivity growth.
Note: Labour productivity is measured as GDP per person employed.
Source: OECD calculations based on World Bank data and the UAE’s Federal Competitiveness and Statistics Centre data.
FDI in the UAE is largely concentrated in domestic market services rather than in high-productivity or tradable sectors. Wholesale and retail trade -the largest recipient of inward FDI stock (26%) - and real estate (24%) attract roughly half of total foreign investment, yet both record only moderate labour productivity (Figure 2.3, Panel B). These sectors primarily serve domestic demand and typically generate limited technology diffusion or export linkages. The composition of inward FDI therefore reflects a predominantly market-seeking profile, rather than one geared toward efficiency, innovation or global value chain integration. Higher-productivity sectors attract some foreign investment, but not to the degree seen in economies where FDI drives upgrading. Finance and insurance, a relatively productive sector, receives 21% of inward FDI, indicating that foreign firms do contribute to the development of sophisticated services. High-value “other services” exhibit high productivity but account for a comparatively small share of FDI stock.
Activities with stronger tradability and higher knowledge intensity -particularly digital, technology-enabled and business services, as well as selected advanced manufacturing niches- remain underrepresented in the UAE’s inward FDI stock. At an aggregate level, manufacturing accounts for only 7% of inward FDI stock and exhibits relatively low labour productivity (Figure 2.3, Panel B), potentially reflecting the limited scale of high-technology and export-oriented industrial activity. At the same time, recent FDI flows have increasingly concentrated in higher-value services and technology-enabled activities, suggesting a gradual reorientation of new investment. For a small, open economy with high wage levels, productivity gains are more likely to stem from high-value tradables, including software, ICT services, professional and business services, and other digitally enabled activities, where scale, innovation and knowledge spillovers play a larger role. In economies that have successfully diversified toward such activities, foreign firms have contributed to capability upgrading and integration into global value chains primarily through services-led and technology-intensive segments. In the UAE, the evolving composition of inward FDI suggests increasing scope for higher-value tradable and knowledge-intensive activities to contribute to productivity growth.
2.3.2. FDI in R&D is increasing and plays a growing role in supporting innovation
The UAE has substantially increased its innovation effort and is approaching the levels seen in global technological leaders, although its R&D intensity remains somewhat lower. With R&D expenditure reaching 1.5% of GDP, the UAE now exceeds the OECD average (0.98%) and ranks highest in the MENA region (Figure 2.4, Panel A). Regional comparators such as Saudi Arabia, Qatar and Oman devote considerably smaller shares of GDP to R&D, underscoring the UAE’s stronger policy emphasis on research and advanced technologies. R&D intensity remains below the levels observed in innovation front-runners such as Singapore (2.2%), Australia (1.9%) and Estonia (1.8%), though the gap has narrowed relative to some peers. The gap points to an innovation system that is still transitioning from a predominantly government-led model toward one where private-sector research, commercialisation and business-to-science collaboration play a larger role. Expanding the participation of domestic firms. particularly SMEs, in R&D and applied innovation will be central to translating national strategies into productivity gains.
The UAE is also becoming more attractive for FDI in R&D-intensive activities, although levels remain modest compared with frontier economies. The share of greenfield FDI projects with an R&D component increased from 3.2% in 2014-18 to 3.7% in 2019-24, bringing the UAE close to the OECD average (3.9%) (Figure 2.4, Panel B). While considerably below economies where foreign firms are major contributors to national R&D, such as Canada (15.8%) and Ireland (10.3%), the UAE performs favourably relative to most regional peers. Recent improvements in digital infrastructure, specialised innovation clusters and human capital initiatives are strengthening the country’s attractiveness for technology-oriented investors. Scaling up the depth and technological content of R&D-related FDI will be important for fostering stronger knowledge transfer to domestic firms.
The composition of R&D-related FDI shows clear movement toward knowledge-intensive and emerging technology sectors. Software and IT services account for the largest share of R&D project announcements (26%), followed by communications (17%), business services (8%) and a growing set of technology domains such as automotive technologies (7%), healthcare, space and defence (each 5%) (Figure 2.5, Panel A). Compared with 2015-19, when communications dominated R&D investment, the current period exhibits a more diversified technology profile, with increased activity in applied digital technologies, advanced engineering and science-based sectors. This shift reflects the UAE’s broader policy emphasis on advanced manufacturing, AI, life sciences and space technologies, and suggests early signs of foreign investor response to the development of specialised clusters, research institutions and sector-focused investment programmes. As these sectors expand, they may play a greater role in building domestic technological capabilities and widening opportunities for knowledge diffusion.
Source: OECD calculation based on World Bank data, and fDi Markets database (2025[4]), https://www.fdimarkets.com/
Knowledge-intensive FDI is becoming more geographically diversified across emirates, indicating a broadening of the UAE’s innovation ecosystem. Dubai remains the principal destination (54% of projects in 2020-24), but its share has fallen from 71% in the previous period as other emirates strengthen their capacity to attract technology-intensive investment (Figure 2.5, Panel B). Abu Dhabi has increased its share from 23% to 29%, reflecting targeted initiatives in advanced industries - including the Advanced Technology Research Council (ATRC) programmes, the development of innovation hubs, and sector-focused investment incentives delivered through Abu Dhabi Investment Office - alongside the expansion of research-intensive clusters, and the growing role of public investment entities in anchoring high-value projects. Sharjah’s rise, though modest, points to emerging capabilities in education-based innovation and specialised free zones. The increasingly distributed pattern of R&D-oriented FDI suggests that the UAE’s innovation geography is becoming more multi-polar, with Emirates developing complementary market entry opportunities and sectoral specialisations. This diversification can enhance national innovation performance by reducing concentration risks and enabling more regionally balanced development and knowledge spillovers.
Source: OECD calculation based on (Financial Times, 2025[4]) fDi Markets Database, https://www.fdimarkets.com/
Greenfield investments trends show that overall digital FDI in UAE has increased over time, and in particular digital services, consistent with the country’s broader shift toward more technology-intensive activities. Greenfield data are used as they capture new productive investment and provide more detailed sectoral information on digital activities than aggregate FDI statistics. Average annual digital FDI shares were around 5-6% between 2003 and 2015, before rising to approximately 10-12% from 2016 onwards, supported by improvements in the policy and regulatory environment and the expansion of digital infrastructure (Figure 2.6, Panel A). Within this evolution, digital services have been the main source of growth, increasing steadily and reaching 17% of total greenfield FDI projects in 2024, their highest recorded level. By contrast, investment in ICT goods and electrical components has remained relatively limited, generally 1-3% of total projects, while telecommunications projects have declined over time, reflecting fewer new market entry opportunities. The composition of digital FDI has comparatively limited activity in digital manufacturing segments.
The UAE’s digital FDI performance is moderate relative to global leaders but strong within its region. Over 2019-24, digital activities accounted for around 14% of total greenfield FDI, above the averages in the GCC (around 9-10%) and the broader MENA region (around 10%) (Figure 2.6, Panel B). The UAE remains below economies such as Ireland, Malaysia, Singapore and Canada, where digital sectors constitute 30-60% of total investment. The structure of digital FDI also differs from that of high-performing peers: while the UAE’s share of digital services (10%) is broadly comparable to the OECD average, investment in ICT goods (1.9%) and electrical components (1.7%) remains comparatively low, indicating more limited participation in global digital manufacturing value chains. Overall, the evidence suggests that the UAE has made meaningful progress in attracting digital FDI –particularly in services– while the current pattern of investment reflects a concentration in service-based activities rather than deeper integration into digital manufacturing value chains, with implications for the types of spillovers and linkages generated domestically.
Source: OECD calculation based on (Financial Times, 2025[4]) fDi Markets Database, https://www.fdimarkets.com/
Digital FDI is highly concentrated across Emirates. Over 2014-24, Dubai attracted around two-thirds of all digital greenfield FDI (67%), driven by substantial inflows into both digital services and telecommunications (48%) and ICT goods and electrical components (19%). Abu Dhabi hosts a smaller but still significant share, representing 15% of total digital FDI, with investment concentrated primarily in digital services and telecommunications (13%) and more limited activity in ICT-related manufacturing (2%). A further 16% of digital FDI is recorded under “not specified”, reflecting projects whose Emirate-level location is not disclosed but which likely relate to federal-level or multi-Emirate investments. By contrast, the remaining Emirates, including Sharjah, Ras al Khaimah, Fujairah, Ajman and Umm Al-Quwain, captured less than 1% each of total digital FDI, with very limited investment across all digital segments. These patterns reflect differences in digital ecosystem depth, infrastructure and investor orientation, and suggesting scope to broaden the geographic distribution of digital activities.
The UAE has seen an increase of FDI in ICT and internet infrastructure, with its share rising from 2% in 2005-14 to 6% in 2015-24 (Figure 2.7, Panel A). This marks clear progress but places the UAE below the faster-growing performers in both global and regional comparisons. Saudi Arabia, Bahrain and Oman registered sharper increases over the same period, while economies such as Estonia, Norway and Malaysia now attract over 20% of total FDI into ICT infrastructure. Countries including Ireland, Canada and Australia also maintain higher and more stable levels.
The pattern partly reflects the UAE’s telecommunications sector having built extensive, high-quality network infrastructure, with foreign investment increasingly oriented toward selective upgrades, partnerships and adjacent digital infrastructure rather than large-scale network deployment. While this reduces the sector’s role as a destination for new FDI, telecommunications continue to play a substantial direct economic role through domestic capital formation, high-skill employment and fiscal contributions, while serving as critical enabling infrastructure for investment and productivity growth across the wider digital economy. Overall, the UAE’s performance suggests improving capacity to attract digital infrastructure investment, though its relative position indicates scope to further strengthen the enabling environment to match leading peers.
The composition of technology-specific FDI shows that the UAE’s strengths lie in large-scale, data-intensive activities, while investment remains more limited in other emerging technologies(Figure 2.7, Panel B). Between 2016 and 2024, the UAE attracted substantial investment in cloud computing (USD 6.9 billion) and data centres (USD 6.2 billion), confirming its role as a regional hub for core data-intensive infrastructure. Investment in cybersecurity, fintech and artificial intelligence, each exceeding USD 1.4 billion, also reflects growing alignment with global digital economy trends. However, flows into blockchain, cryptocurrency, e-commerce and robotics remain comparatively modest, resulting in a narrower technological profile than that observed in leading digital economies. While the UAE is consolidating its position in foundational digital technologies, further diversification of digital FDI could support convergence with higher-performing international peers.
Source: OECD calculation based on (Financial Times, 2025[4]) fDi Markets Database, https://www.fdimarkets.com/
The UAE's greenfield FDI landscape has undergone a structural shift over the past two decades, with a clear growth of renewable energies and environmental technologies as shares of total greenfield FDI. In the early 2000s, greenfield FDI was heavily directed towards fossil fuels, peaking at over 40% of total greenfield FDI in 2003. From 2007 onwards, the relative share of greenfield FDI directed to fossil fuels declined sharply, reflecting rapid growth in other sectors rather than a sustained contraction greenfield FDI levels towards fossil fuels. Since 2010, investment in renewable energy has steadily gained, with a marked acceleration from 2017 onwards. In 2020, renewable energy represented the majority of environmentally related FDI. The relative share of renewables remained consistent through 2021-2023, confirming a growing role for renewables as a destination for greenfield FDI.
The UAE is an attractive destination for FDI in renewables, compared to peers. About 37% of total greenfield FDI is directed to renewable energy and environmental technologies between 2019 and 2024. This share places the UAE among the more prominent destinations for greenfield FDI in renewables, outperforming the OECD and GCC averages of 25% and 28% respectively, as well as individual GCC peers such as Saudi Arabia (24%) and Qatar (2%). While the share of greenfield FDI In renewables remains below other comparator GCC and MENA economies, such as Jordan (77%), Bahrain (49%), and Oman (45%) (Figure 2.8, Panel B), the UAE nonetheless distinguishes itself by leading in the absolute number of renewable energy projects and by maintaining a sustained and consistent flow of greenfield FDI into renewables over this time period.
The share of greenfield FDI into environmental technologies is also ahead of the level of many regional and international peers. Environmental technologies include the production of renewable energy components (e.g. solar panels and wind turbines), water and sewage infrastructure, basic chemicals linked to carbon capture, battery production, and waste management solutions. Between 2019 and 2024, greenfield FDI into environmental technologies in the UAE was 5% of total greenfield FDI, rising to 8% in 2023-24. This places UAE levels above the OECD average (1.9%) and MENA average (3%), as well as most comparator economies except Saudi Arabia (11%) and Malaysia (9%) (Figure 2.8, Panel B). The UAE promotes itself as an FDI destination in areas such as advanced desalination and water reuse, smart wastewater treatment, recycling and waste-to-energy infrastructure, and air pollution monitoring and control systems (Invest in Dubai, 2025[7]; U.S. Department of Commerce, 2025[8]).
By 2024, the combined share of greenfield FDI in renewables and environmental technologies consistently outpaced fossil fuels, signalling increasing investor alignment with the UAE’s net-zero goals and low-carbon development ambitions. In 2017, the UAE launched the National Energy Strategy 2050 which includes targets to triple the supply of renewable energy by 2030 and achieve net zero emissions by 2050, committing to an investment of an additional USD 54 billion (or 2 percent of GDP per year) to achieve these objectives (Ministry of Energy and Infrastructure, 2023[9]). The subsequent update of this strategy reinforced and accelerated these targets, which is expected to further stimulate greenfield FDI into renewable energy and related technologies moving forward.
Source: OECD based on (Financial Times, 2025[4]) fDi Markets Database, https://www.fdimarkets.com/
Greenfield investment patterns show subnational variations in the relative importance of renewables within the overall greenfield FDI mix. Dubai and Abu Dhabi recorded higher shares of greenfield FDI to renewables, owing to their leverage as economic hubs but also broader economic diversification strategies and clean energy investments. Subnational strategies and initiatives, such as the Abu Dhabi’s Energy Strategy 2050 and Dubai’s Mohammed bin Rashid Al Maktoum Solar Park, have helped establish long-term policy commitments and enhance the visibility of renewables to foreign investors. Between 2019 and 2024, renewable energy projects increased in both Emirates compared to 2012 to 2016, with Dubai accounting for a larger share. Yet, renewables remain a relatively small portion of total greenfield FDI projects in each Emirate, despite their leading positions in attracting greenfield FDI, indicating that renewable energy investment has been driven by a number of large-scale projects rather than a broad expansion in project counts.
Other Emirates attracted comparatively smaller shares of greenfield FDI in renewable energy. Between 2014 and 2024, Fujairah and Sharjah received disproportionately high shares of greenfield FDI towards fossil fuels, accounting for over two thirds of total greenfield FDI in Fujairah and more than half in Sharjah. These patterns may reflect the historical economic orientation of these Emirates toward hydrocarbons and the presence of established industrial and logistical infrastructure linked to the oil and gas sector. By contrast, Ras Al Khaimah attracted relatively limited greenfield FDI in either category, with few projects announced pre-2012. This likely reflects its alternative sectoral specialisation. Overall, these trends highlight the importance of tailored regional strategies to ensure that FDI contributes to diversification beyond the primary economic hubs.
Greenfield FDI in renewables, other environmental technologies and fossil fuels (% of total greenfield FDI in each Emirate), 2014-24
Source: OECD based on (Financial Times, 2025[4]) fDi Markets Database, https://www.fdimarkets.com/
2.6.1. Greenfield FDI is an important driver of job creation in the UAE, outperforming most peer economies
Greenfield FDI has been an important source of job creation in the UAE in recent decades. The job intensity of greenfield FDI, measured by the number of jobs created per billion USD invested, is around 2 300 jobs per billion USD in the UAE (Figure 2.10). The level is above the GCC average of nearly 1 500 jobs and the OECD average of nearly 1 900 jobs. The job intensity is also higher than many other peer economies such as Singapore, Ireland, Australia, Canada, and Malaysia, but remains below Estonia and Mauritius.
While greenfield FDI is more job-intensive in the UAE than most peers, the ratio has remained constant over time. In 2003-13, greenfield FDI to the UAE generated 2 357 jobs per billion USD and remains nearly the same the following decade. Conversely, GCC economies such as Qatar, Saudi Arabia, and Kuwait have experienced growth in the jobs generated by greenfield FDI in the past decade. This implies that the composition of greenfield FDI has remained broadly unchanged in recent decades, and that future employment gains tied to greenfield FDI may depend on whether foreign investment is directed to sectors that offer greater potential for job creation. For instance, electricity generation, whether from renewable and non-renewable sources, is highly capital-intensive, and FDI in the sector generates fewer direct jobs.
Source: OECD calculation based on (Financial Times, 2025[4]) fDi Markets Database, https://www.fdimarkets.com/;
2.6.2. Job intensity of FDI varies across sectors, with services accounting for a rising share of employment in the UAE
The job intensity of greenfield FDI in the UAE varies across sectors (Figure 2.11), with service activities taking a more prominent role in the past decade. Capital-intensive sectors, such as oil and gas, real estate, and renewable energy, remain the largest recipients of greenfield FDI in the past decade and among the least-job intensive. The sectors collectively accounted for nearly half of all greenfield FDI in 2014-24 but generated 7% of the total jobs led by greenfield FDI.
Service activities are the main drivers of job creation from greenfield FDI, with their contributions expanding over time. Business services account for nearly 12% of total jobs generated by greenfield FDI, followed by software and IT services (12%), and transportation and warehousing (11%). Collectively, these sectors account for more than one third of all jobs (34%) in 2014-24, more than double their share in previous decade (15% in 2003-13). The job growth in service sectors coincides with a reduced role for real estate, whose share of FDI-related jobs fell from 28% in 2003-13 to just 3.8% in the following decade.
Manufacturing activities have the highest potential to translate FDI into employment gains in the UAE, but these activities account for modest shares of total FDI-related employment currently. Greenfield FDI in automotive components, building materials, and transport equipment are among the most job-intensive activities, generating between 7 000 and 13 000 jobs per billion USD. However, these activities collectively account for 10% of total employment created by greenfield FDI currently. The limited role for manufacturing to contribute to total employment in the UAE is a trend shared with other GCC economies, where services sectors remain the dominant source of job creation.
Jobs created from greenfield FDI (thousand jobs), 2014-2024
Note: Figure excludes sectors with less than 0.5% of total greenfield FDI jobs: biotechnology, paper printing and packaging, minerals, engines and turbines, wood products, semiconductors, ceramics and glass.
Source: OECD calculation based on (Financial Times, 2025[4]) fDi Markets Database, https://www.fdimarkets.com/;
2.6.3. Job creation from FDI is predominately centred around Dubai and Abu Dhabi
The employment footprint of greenfield FDI in the UAE is highly concentrated geographically, with Dubai accounting for roughly two thirds of all jobs created and Abu Dhabi a further one-fifth (Figure 2.12, Panel A). In Abu Dhabi, the sectors accounting for the largest shares of jobs from greenfield FDI is transport and warehousing (20%), metals (11%), healthcare (8%) and business services (7%), while in Dubai, the largest contributors are business services and software and IT services (14% each), tourism and transportation and warehousing (8% each).
The remaining Emirates, Sharjah, Ras Al Khaimah, Fujairah, Ajman, and Umm Al-Quwain, capture less than 10% of total employment generated by greenfield FDI, reflecting their smaller investment bases and more specialised sectoral profiles. Sharjah captures the largest share outside of Abu Dhabi and Dubai, accounting for nearly 4% of total employment between 2014 and 2024, which is concentrated in sectors such as business services, metals, and transportation. This is followed by Ras al Khaimah and Fujairah at 2% each. The remaining two Emirates-Ajman and Umm Al-Quwain-capture less than 1% of total employment collectively.
Source: OECD calculation based on (Financial Times, 2025[4]) fDi Markets Database, https://www.fdimarkets.com/
The UAE shows variation in the skill intensity of FDI-related employment across activities. Activities such as ICT, electricity generation and education are the most skill-intensive areas of the economy, based on the skills composition of occupations in these industries. However, these activities account for relatively smaller shares of jobs generated by FDI (Figure 2.13), indicating that, while these activities offer opportunities for high skill-intensive employment, their capacity to generate such jobs at scale is limited.
By contrast, other skill-intensive activities, notably business services and sales and marketing, combine a relatively moderate skills intensity mix with stronger capacity for job creation. For instance, business services accounted for around 16% of total FDI jobs between 2017 and 2023, while recording an average skill-intensity index of 2.6 over the same period, indicating a medium-to-high skill mix. While these activities also exhibit relatively high skill intensity, they attract more moderate shares of FDI employment, suggesting a stronger capacity to translate skills demand into job creation.
Other activities offer stronger potential for job creation but lower average skill intensity. Manufacturing, construction, and transportation account for important shares of jobs generated by FDI and are positioned toward the lower end of the skills spectrum in relation to other activities, as their employment structures rely more heavily on routine and medium-skilled occupations, resulting in a lower overall skill intensity despite their significant contribution of employment volumes.
Share of total greenfield FDI jobs by skills intensity, 2017-23
Note: The skill intensity index is constructed as a weighted average of skill tiers (low = 1, medium = 2, high = 3), capturing the average skill level of FDI jobs by activity. The index combines project-level FDI employment data (announced job creation) with national employment structures by skill level from ILO employment data. The analysis is restricted to activities observed in at least three years. Data for 2019 is not available.
Source: OECD calculation based on (Financial Times, 2025[4]) fDi Markets Database, https://www.fdimarkets.com/; (ILO, 2025[10]) ILO Statistics https://ilostat.ilo.org/data
2.6.4. Greenfield FDI has untapped potential to support women’s economic participation and Emiratisation
The UAE has recently taken several policy measures to increase the participation of nationals in private sector employment (i.e. Emiratisation) by implementing skills development programmes and incentives for private firms who meet predefined quotas. Under conducive domestic policies, foreign firms can be well positioned to advance Emiratisation as they tend to offer better working conditions relative to domestic firms (OECD, 2022[11]), and can therefore provide stronger incentives for nationals to pursue private sector careers. However, the impact of FDI is maximised when foreign investment is directed towards sectors that already benefit from national labour.
The UAE has identified healthcare and education as priority sectors for Emiratisation, but these sectors receive less than 4% of total greenfield FDI collectively (Figure 2.4). Similarly, construction, financial and insurance activities account for 30% of total Emirati employment in the private sector but receive 9% of total greenfield FDI. The relatively high share of nationals in construction reflects its role as one of the UAE’s largest private sector employers (MOHRE, 2025[12]), meaning even limited national participation results in a sizeable employment share, reinforced by Emiratisation quotas and related policy efforts. Within the private sector, Emiratis are more likely to occupy supervisory, technical, and administrative roles, while expatriates remain concentrated in lower skill-intensive occupations (FCSC, 2019[13]).
Conversely, greenfield FDI is also concentrated in sectors with relatively low Emirati participation, such as electricity and gas activities, which received nearly a third of total greenfield FDI in 2019-24 but where nationals account for less than 1% of their total private sector employment. In such cases, complementary labour market, skills development, and FDI policies are needed to ensure that nationals are both incentivised and equipped with the skills to access opportunities generated by foreign firms.
Greenfield FDI is also concentrated in capital-intensive sectors that feature low female labour participation. Manufacturing and energy collectively receive around half of total greenfield FDI, yet women represent only 9% of total employment in manufacturing and 18% in the energy sector (ILO, 2025[10]). Similar to Emiratisation, the impact of FDI on female employment is likely to be more meaningful when investment occurs in sectors where relatively more women work, such as education and healthcare, which feature 69% and 58% of female employment, respectively, but which together receive less than 4% of total greenfield FDI. At the national level, the UAE prioritises productivity-enhancing and globally competitive sectors, while education and healthcare are addressed through parallel labour market, human capital, and Emirate-level initiatives. Closing gender gaps would bring meaningful economic gains to the UAE. The World Bank estimates that full gender parity by 2050 could raise UAE GDP per capita by 17% (Fiuratti, Pennings and Torres Coronado, 2024[14]).
Note: The size of the bubble represents the share of a sector in total greenfield FDI between 2019 and 2024.
Source: OECD calculation based on (Financial Times, 2025[4]) fDi Markets Database, https://www.fdimarkets.com/; ILO (2025[10]), https://ilostat.ilo.org/data/; and UAE’s Ministry of Human Resources and Emiratisation (2025[15]), https://www.mohre.gov.ae/en/open-data/statistical-report
References
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