The high volatility of global prices and the international community’s commitment to sustainable development goals have become major challenges for countries dependent on oil and gas revenues (Ankrah et al., 2023; Chen et al., 2024; Filipović et al., 2022; Hasanli and Rahimli, 2023). This has necessitated a shift in their long-term energy policies and the pursuit of economic diversification strategies. However, not all countries have successfully transitioned from a resource-based economy to technological progress (Mohamed et al., 2021; Seyfullali, 2023; Yap et al., 2022). Consequently, significant scholarly attention has focused on examining the energy policy and diplomatic approaches of nations attempting to reduce their economic dependence on natural resources. A particularly noteworthy case is that of the United Arab Emirates (UAE). Over the past two decades, the UAE has emerged as a regional leader in the innovative transition toward a new economy based on digital technology and alternative energy (Al Naqbi et al., 2019; Mistarihi et al., 2025).

The global energy system is currently undergoing a complex shift from decades of coal and oil dominance toward renewable and alternative energy sources (Bashir et al., 2025; Gałecka and Pyra, 2024; Kaya and Kaya, 2025; Shestak and Postoeva, 2022). The transition to low-carbon energy has considerable potential to reshape the relationships between energy producers and consumers, raising critical and understudied geopolitical issues for major energy-dependent countries. In this context, diplomacy has become a key instrument of foreign policy for managing the consequences of the energy transition (Griffiths, 2019). The strategic decision-making process in international politics and diplomacy must therefore incorporate the principles of policy coherence and feedback (Cubie and Natoli, 2022; Righettini and Lizzi, 2022).

Initially, the energy diplomacy of the oil-producing countries of the Middle East was based on using energy resources as a lever of influence to achieve political and economic objectives, leveraging their vast reserves and geostrategic positions. In recent years, however, international efforts have focused on reducing geopolitical risks in the region, which necessitates a shift not only toward clean energy but also toward strengthening global energy governance and diversifying the economies of Middle Eastern countries (Wen, 2024).

Within the context of global energy transformation, a key research direction concerns how Middle Eastern states are restructuring their energy strategies and governance institutions to reduce dependence on natural resource revenues and external assistance (Miao, 2025). The transition from fossil fuels to renewable energy sources is examined not only through the lens of climate commitments but also as a consequence of protracted conflicts in critical regions, primarily in the Middle East and Eurasia. The combined effects of climate change and military conflicts underscore the need to enhance global energy supply chains and address the problem of resource dependency. Energy diplomacy provides a promising pathway toward achieving this goal through diversification and technological advancement (Gerani and Komnios, 2025).

Energy diplomacy represents a complex domain of international relations, deeply intertwined with foreign policy and national security (Bovan et al., 2020). Within this framework, it is important to consider the UAE’s decades-long experience in developing energy policy and diplomacy during its transition from resource dependence to technology-driven innovation. An analysis of both existing and planned energy projects in the UAE, along with its economic diversification efforts, holds considerable scientific and practical relevance. Examining these aspects is crucial for comprehending their impact on the international landscape and the emerging architecture of global relations (Krzymowski, 2020). Over recent decades, the UAE has achieved remarkable progress in implementing strategic initiatives for sustainable development. The country has successfully transitioned toward innovative approaches in high-technology sectors, particularly in tourism, transportation logistics, infrastructure, and digitalization. However, several challenges persist that demand international coordination and increased investments in education, human capital, and scientific research (Alzarooni et al., 2024; Crupi and Schiliro, 2023; Ewers, 2016; Shadab, 2023). The UAE’s economic model demonstrates long-term strategic vision, efficient utilization of natural resources, and innovative pathways. The analysis offers valuable insights for other countries, highlighting the importance of continuous reforms and adaptations to achieve sustainable growth and global economic integration.

The scholarly novelty of this study on UAE energy policy and diplomacy lies in its analysis of the country’s unique approach to transitioning from a traditional resource-based economy to technological innovation. This investigation revealed and analyzed new models of economic diversification and sustainable growth strategies. The practical value of the present study emerges from its potential to inform effective strategies for other resource-dependent nations seeking economic diversification. The findings provide crucial insights into complex energy system transformations and their implications for economic and political stability in the Persian Gulf region.

An analysis of global primary energy consumption by region and fuel type, along with projections through 2050, reveals a deceleration in fossil fuel usage alongside the increasing adoption of alternative energy sources. This global trend reflects current energy policy directions toward the post-carbon era. The projected average annual growth rate of global consumption between 2022 and 2050 is 0.7% for petroleum-based liquid fuels, 0.9% for natural gas, 0.1% for coal, and 0.8% for nuclear energy. Growth for other alternative energy sources is expected to reach approximately 2.8% (Table 1).

Table 1 presents electricity generation from renewable sources (hydropower, wind turbines, and solar panels) converted to British thermal units (Btu) using a conversion factor of 8,124 Btu per kilowatt-hour. Global alternative energy production may reach 136.8 Btu by 2030, compared to 100.5 Btu in 2022 and a projected 114.8 Btu in 2025. By 2050, alternative energy consumption is anticipated to nearly equal liquid fossil fuel consumption, with 219 Btu and 231.9 Btu, respectively. As of 2022, the UAE possessed available energy reserves totaling 107 billion barrels of oil and 7.7 trillion cubic meters of natural gas (Table 2).

The country demonstrates particularly strong potential in solar energy. Through state-sponsored initiatives, the UAE continues to strengthen its solar energy sector by implementing large-scale renewable energy investment projects. These measures directly support national sustainable development goals and the 2050 climate neutrality target.

The UAE currently operates three of the world’s major solar power plants, with plans to expand its renewable energy capacity to 14.2 gigawatts by 2030. This demonstrates the country’s commitment to sustainable transformation and solidifies its leadership in the global energy transition. Solar energy plays a crucial role in maintaining the nation’s energy balance. In line with the updated UAE Energy Strategy 2050 (2017) and The National Hydrogen Strategy 2050 (2023), the government aims to triple clean energy production in the coming years.

The UAE also views solar energy as a strategic tool for climate change mitigation. Large-scale renewable energy projects not only meet growing electricity demand but also enhance regional and global energy security while fostering diplomatic relations. Moreover, the modernization of energy transmission and distribution infrastructure further promotes international energy integration. These initiatives underscore the country’s dedication to sustainable technology investments and reinforce its position as a global leader in renewable energy.

Another key area of international energy cooperation involves advancing nuclear power. The UAE has constructed one of the world’s largest nuclear power plants, Bakarah NPP, featuring four units with a total installed capacity of 4,251 MW as of January 1, 2024. Figure 1 illustrates the main directions of the UAE energy policy. Despite increasing oil production, the country continues to pursue economic diversification and a gradual reduction of resource dependence.

The UAE has substantially departed from traditional OPEC principles in its energy policy and foreign diplomacy, increasingly employing elements of “soft power.” Such instruments are actively utilized in international engagements and joint investment projects. This approach fosters sustained trust in international relations and maintains a favorable investment climate.

An analysis of economic trends and structural transformation in the UAE reveals steady progress despite reduced oil sector contributions to total exports. The share of oil revenues declined from 93.8% in 2000 to 68.2% in 2023, while the national economy expanded considerably through new sectors and service industries (Table 3). Comparative analysis with other energy-exporting nations from the Persian Gulf and Central Asia—particularly Saudi Arabia, Oman, and Kazakhstan—demonstrates superior outcomes in the UAE’s implementation of its new energy policy and economic diversification strategy. This is evidenced by more substantial reductions in fuel exports as a percentage of total merchandise exports.

The UAE’s economic expansion has been particularly noteworthy, with GDP increasing from $104.3 billion in 2000 to $514.1 billion in 2023. Correspondingly, GDP per capita rose from $29,865.5 to $49,040.7 during the same period. Additionally, high-technology exports grew significantly from $493.1 million in 2012 to $3,417.6 million in 2023 (Appendix A). High-technology exports comprise research and development (RandD) products, including aerospace equipment, computers, pharmaceutical products, scientific instruments, electrical machinery, robotics, software, and artificial intelligence (AI) technologies.

The analysis of the UAE National Energy Strategy 2050 revealed that export diversification constitutes a fundamental component of the country’s contemporary economic policy (UAE Ministry of Energy and Industry, 2017). This strategic approach aims to reduce dependence on oil revenues while establishing a sustainable and technology-driven economy. Data from official government documents available on the United Arab Emirates’ Government portal demonstrate that both public institutions and private enterprises have actively worked to expand the nation’s export capabilities across various economic sectors in recent decades. These diversification efforts include significant advancements in the chemical and metallurgical industries, with increased production of aluminum, steel, and chemical products. Such industrial growth has enabled the UAE to secure competitive positions in international markets. The country’s strategic geographic location and advanced infrastructure, including port and airport facilities, have transformed it into a crucial trade hub for Middle Eastern, Asian, and African markets. This advantage has substantially boosted re-export volumes and transportation logistics. According to UNCTADstat data (2025), tourism services have become a major revenue source, attracting millions of visitors and stimulating sectoral growth. The UAE has also made massive investments in advanced technologies, venture projects, and startups, fostering new industries in information technology and renewable energy. Despite limited natural resources, the country has developed agricultural technologies such as hydroponics and vertical farming to increase food production and exports. This comprehensive diversification strategy has allowed the UAE to develop a resilient and competitive economic structure capable of adapting to global market fluctuations. By attracting substantial foreign investment into the technological sector, along with funding from national state funds, the country has created a favorable institutional environment for innovative growth. Between 2005 and 2023, the volume of financial investment nearly tripled, reaching $30.7 billion (Figure 2).

In recent years, the UAE has emerged as a global leader in artificial intelligence technologies, data infrastructure, and cloud services. The country launched its National Artificial Intelligence Strategy in 2017, establishing the ambitious goal of becoming a world leader in this innovative economic sector by 2031. Since then, the government has invested billions of dollars, transforming the nation into a modern hub for technological innovation and foreign investment.

A key trend observed over the past two decades has been the declining share of natural resource rents in the gross domestic product of Persian Gulf oil-producing nations. Among these countries, the UAE exhibits one of the lowest indicators in the region, currently standing at approximately 17.6% (Table 4). Its successful reduction of economic dependence on resource extraction offers valuable insights for other oil-producing countries like Kazakhstan. Kazakhstan initially showed similar trends in reducing resource dependence; yet, recent years have witnessed a reversal of this progress.

The UAE has shifted from exporting crude oil to producing high value-added products across multiple industrial sectors. These include the chemical and electrical industries, construction, and machinery and equipment production. The UAE has now established a comprehensive innovation ecosystem that supports both startups and investors.

The Department of Economic Development in Abu Dhabi implemented the “Made in Abu Dhabi” national branding initiative to enhance product reliability and quality. This $100 billion trade initiative exemplifies the strategic use of policy and diplomatic tools for economic diversification. The program mandated the inclusion of the “Made in Abu Dhabi” brand on all industrial licenses issued to factories and manufacturing companies in the city.

To assess development prospects for the UAE, the study developed an econometric model accounting for heteroskedasticity. This model evaluates several critical dimensions: the role of energy markets, innovation economies, the impact of international relations, trade diplomacy, sustainable development, and renewable energy transition.

Heteroskedasticity refers to a regression analysis condition where the error variance is non-constant. This phenomenon can yield inefficient coefficient estimates and incorrect conclusions about the significance of variables. Various correction methods address this issue, including heteroskedasticity-corrected models. Using the collected UAE research data, the study derived the key parameters of the model (Table 5).

The independent variables incorporated into the model demonstrate high statistical significance. This is evidenced by p-values below the conventional threshold of 0.001. The reliability of the regression equation is further substantiated through the comparative analysis of statistical criteria presented in Table 6.

The first model (S1 and S2) assumes sustainable development while maintaining current high oil production levels alongside alternative growth in high-technology exports (Table 7). The second forecast scenario (M1 and M2) presents a moderate growth pathway featuring a 20% reduction in oil production coupled with a compensatory expansion in high-technology exports. More complex scenarios emerge in the third model (C1 and C2), which examines crisis conditions involving a double reduction in oil output. Nevertheless, the model suggests an alternative trajectory of growth in high-technology exports.

An examination of these models and five development scenarios revealed distinct economic outcomes. Under the first scenario (Model S1), which maintains traditional economic structures and favorable oil market conditions, GDP per capita would reach $62,478.5. This projection assumes maximum annual oil production of 200 million tons and current oil export revenues constituting 68% of GDP. The second variant of this model, while maintaining existing high-technology export volumes, projects GDP per capita growth to $62,804.0. Subsequent scenarios (second through fifth) incorporate declining global oil prices and reduced petroleum export revenues, which would adversely affect per capita GDP indicators. These negative impacts could be mitigated by doubling high-technology export values—a compensatory measure integrated into each of the following scenarios.

Models M1 and M2 propose a moderate policy of reducing dependence on oil resources, with a decline in annual production to 160 million tons. Models C1 and C2 are crisis-oriented and foresee a reduction in oil production to 100 million tons per year. An analysis of these models indicates that a sharp departure from resource dependence poses economic challenges in the short term. However, in the medium and long term, this path appears to be the most favorable if efforts to advance high-technology exports are intensified.

To assess more uncertain factors—such as geopolitical conflicts and the pace of technological innovation—and to optimize the assumptions of the regression model while improving its accuracy and reliability, a multivariate time series model of the VECM type was developed. Given the presence of cointegration among several variables, particularly between exports, GDP, and oil production, the VECM approach is preferable for accurately interpreting long-term effects. This made it possible to analyze the internal interrelations and long-term development of the country using three endogenous variables (Merchandise Exports, GDP, Oil Production) and two exogenous variables (World Crude Oil Price, Energy Intensity).

The endogenous variables were included in the model to evaluate the joint dynamics and cointegrating relationships: Merchandise Exports (current million US$), GDP (current million US$), and Oil Production (million tons). These three variables are linked in a long-term equilibrium relationship (cointegration) and interact within the system, demonstrating adjustment through exports and GDP.

The exogenous variables were introduced as external shocks/regressors: World Crude Oil Price (US$/barrel) represents a determining global price often treated as exogenous for a single economy, while World Energy Intensity (EJ/$T) serves as a global indicator of energy efficiency and consumption structure, typically an exogenous regressor for national economies. The resulting VECM system is presented in Table 8.

In this model, beta represents the cointegration vector, indicating the coefficients in the long-term (equilibrium) relationship between the levels of the variables. The value of alpha denotes the adjustment coefficients vector. Each element of alpha reflects how rapidly the corresponding endogenous variable responds to deviations from the long-term equilibrium (i.e., the size of the cointegration error). The adjustment coefficients are as follows: GDP = −0.89068, Merchandise Exports = −0.77782, and Oil Production ≈ − 6.09e−5. A negative sign indicates adjustment toward reducing the cointegration error (the normalization of signs depends on the beta specification). The absolute value indicates the speed of return to equilibrium (for example, −0.89 corresponds to approximately 89% correction per period).

The data analysis confirms the presence of cointegration. The cointegrating relationship can be expressed as GDP + (−372.10)·Oil Production + (−0.49347)·Merchandise Exports = 0 (in data scale). The alpha values show that GDP and exports strongly adjust to disequilibrium (−0.8907 and −0.7778, respectively), whereas oil production exhibits almost no adjustment (−6.09e−5). This indicates a long-term equilibrium restored primarily through GDP and exports, while oil production behaves as a “long-term” variable.

For d_GDP, all regressors are statistically significant (constant −8.61e6, oil price +1,245.79, p < 0.001; Energy Intensity +1,962.77, p < 0.001; Data +4,294.67, p < 0.001). The error correction term (EC1) is strongly negative (−0.8907, p < 0.001), meaning that a negative deviation from equilibrium leads to an increase in GDP in the next period, with an adjustment speed of about 89% per period. The model explains approximately 61% of the variation (R² = 0.613). The Durbin–Watson statistic equals 1.66, suggesting minor autocorrelation.

For d_OilProduction, few regressors are significant; only World Energy Intensity (0.4151, p = 0.0447) shows a meaningful effect. Oil price and EC1 are not significant, and the coefficient of determination is low (R² = 0.086), indicating that short-term fluctuations in oil production are poorly explained by the model—consistent with the near-zero alpha for oil production.

For d_MerchandiseExports, the significant variables include the constant term, oil price (+1,162.98, p < 0.001), Energy Intensity (+1,820.75, p = 0.0029), Data (+3,895.51, p < 0.001), and EC1 (−0.7778, p < 0.001). The negative EC1 implies that when exports deviate positively from equilibrium, they adjust downward by approximately 77.8%. The coefficient of determination is R² = 0.43.

In practical terms, this indicates that the world oil price and global energy intensity are key determinants of short-term GDP and export dynamics. Both indicators show positive associations with these variables in time-series dynamics. Oil production functions primarily as a long-term factor (with a large cointegration coefficient of −372.10), showing minimal short-term responsiveness and weak explanatory power in the regression model. Energy intensity is linked to technological innovation, which acts as an endogenous shock for resource-dependent oil-producing countries by promoting global energy efficiency and reducing oil consumption per unit of GDP.

For the Gulf countries under study (the UAE, Saudi Arabia, Kuwait, and Oman), the VECM results allow for several policy recommendations concerning energy and economic development. Since oil production acts as a strong long-term factor but shows limited short-term adjustment, while global oil prices and world energy intensity significantly influence short-term GDP and export dynamics, national policies should account for the distinction between the long-term role of production and short-term external shocks.

For countries with large reserves and high dependence on oil revenues (Saudi Arabia, Kuwait), a leading priority should be the diversification of the economy and export structure, development of advanced processing industries, and expansion of non-resource sectors to reduce vulnerability to global price fluctuations. It is also essential to channel oil revenues into long-term wealth and infrastructure funds, maintain flexible fiscal policies with transitional funds and budget stabilizers, and strengthen institutional mechanisms for managing oil-derived revenues—ensuring transparency, clear spending rules, and targeted investments in human capital and technology. Collectively, these measures would reduce GDP and export dependence on short-term price shocks, given that the system returns to equilibrium primarily through GDP and exports rather than oil production.

For countries with smaller reserves and more diversified economies (such as the UAE), it is crucial to use oil revenues effectively to accelerate the transition toward high-tech, service-oriented, and clean energy sectors. Renewable energy development and energy efficiency improvements should be prioritized, as global technological progress in energy intensity increasingly affects the world economy by reducing long-term oil consumption per unit of GDP. These measures would help stabilize exports and GDP regardless of oil market shocks. In addition, the formation of trade and investment clusters and greater involvement of the private sector in R&D and clean technologies are recommended.

For countries with significant oil production but slower economic growth and limited diversification capacity (such as Oman), the primary focus should be on gradual diversification, emphasizing value-added activities within the energy sector (refining, petrochemicals), as well as the development of small and medium-sized enterprises, including in tourism. Additional attention should be given to implementing energy efficiency measures, encouraging private investment, and improving vocational training and workforce skills.

The implementation of these measures should be aligned with each country’s key development priorities. For Saudi Arabia and Kuwait, a more targeted approach involving active diversification and institutional reforms in revenue management is required; for the UAE, accelerating the transition toward the service and clean energy sectors is essential; for Oman, gradual diversification focusing on refining and the expansion of small and medium enterprises is of primary importance.

This research confirms previously established findings regarding the strategic importance of energy policy and diplomacy for sustainable development and national security. An analysis of similar transformational experiences in other countries, particularly those in the Persian Gulf, enables a comparative assessment of successful energy policies and foreign diplomacy approaches.

Current international climate change commitments have led to increasingly stringent global energy policies, while alternative energy systems gain greater competitiveness (Dagar et al., 2024; Jayabal, 2024). Consequently, many oil-producing nations encounter a dual problem in their economic and political systems. The first challenge involves declining efficiency in utilizing natural resource rents, while the second stems from ongoing geopolitical and geo-economic shifts toward Asia. The Persian Gulf states prioritize the implementation of national energy transition policies, albeit with varying degrees of success. These policies focus on transforming hydrocarbon industries, adopting renewable energy sources and technologies, diversifying economies, and entering into new markets (Mills, 2020). Conceptual debates increasingly emphasize the importance of studying effective practices and approaches when formulating energy policies. Such analysis is necessary to move beyond the simplified dichotomies prevalent in discussions about sustainability transformations and green energy transitions (Zumbraegel, 2024). Energy security has emerged as a critical global concern, particularly due to geopolitical instability and supply chain disruptions (Deirmentzoglou et al., 2024).

The fundamental features of modern international politics are shaped by carbon energy systems. This influence stems from the socio-environmental practices and processes through which this essential resource has been exploited and converted into economic benefits (Selby, 2022). Energy systems have long served as vital elements of diplomacy and foreign policy due to their growing influence on national security and economic stability. These three concepts maintain an ontological hierarchy where national security represents the broadest framework, with energy diplomacy constituting a narrower definition (Bovan et al., 2020). Public support for energy policies proves crucial when developing effective climate mitigation measures and achieving net-zero emission targets (Beiser-McGrath, 2024).

This study differs from similar research examining the economic impact of renewable energy sources on the UAE economy through annual time series analysis. It employed a more targeted selection of indicators and contemporary econometric methods. The primary variables include renewable energy consumption, GDP per capita, capital, employment, trade, inflation rate, interest rate, fixed exchange rate, foreign direct investment, and trade openness from 2010 to 2020. The current investigation covers an extended data period from 2000 to 2023 and incorporates additional target metrics: oil production in the UAE; world crude oil price ($/barrel); fuel exports (% of merchandise exports); and population (million). Previous researchers initially utilized the Autoregressive Distributed Lag (ARDL) model to assess long-term relationships between variables, encountering multicollinearity issues that revealed correlations among independent variables. They subsequently applied an alternative Ordinary Least Squares (OLS) approach to measure connections between renewable energy sources and the UAE economy (Jaradat and AL-Tamimi, 2022). In contrast, the present study utilized the heteroskedasticity-corrected regression model as a more effective method for conducting multivariate computational analysis and economic modeling. This regression technique ensures more precise and reliable analytical outcomes by implementing corrections based on the specific nature of the model’s heteroskedasticity. The methodology effectively addresses unequal variance, guaranteeing that the model maintains consistent goodness-of-fit across all observations.

Another comparative study examining alternative approaches to transitioning from resource dependence to a diversified economy suggests that urbanization and economic development in the UAE reduce environmental pressure. While this perspective merits partial agreement, the current research demonstrates that national prosperity remains substantially dependent on the oil sector’s influence. An abrupt transition to alternative development models could significantly decrease GDP per capita levels. The study also partially concurs with findings indicating that increased foreign direct investment conversely elevates environmental pollution. Consequently, the formulation of new environmental policies remains imperative for promoting sustainable business strategies, implementing eco-conscious practices, and enhancing nationwide environmental awareness. Expanded adoption of clean energy technologies should further contribute to reducing the economy’s overall energy intensity while supporting carbon neutrality objectives (Kilinc-Ata and Alshami, 2023).

Most Arab states, with the exception of the UAE, maintain unitary systems of government. Therefore, their national policies often exhibit strong centralization, which may not always adequately account for local economic, political, and cultural needs. This situation stems from multiple factors, including poverty, insufficient institutional capacity to address the complexities encountered by local communities, or country-specific circumstances that vary across cases (Ali and Jasem, 2024).

The comparative analysis revealed pronounced parallels between the experiences of the UAE and other nations in energy and economic policy approaches. Saudi Arabia, for instance, has committed to achieving net-zero greenhouse gas emissions by 2060. Through its Vision 2030 program, the country aims to derive 50% of its energy from renewable sources while reducing CO₂ emissions by 278 million tons by 2030. This strategic roadmap emphasizes international economic diversification, global diplomatic engagement, and improvements in the quality of life (Islam and Ali, 2024; Matar et al., 2024). The UAE’s diversification experience offers valuable insights for resource-dependent economies like Kazakhstan. Over the past two decades, Kazakhstan has developed its economy primarily through raw material exports, particularly fossil fuels. While this approach generated substantial economic gains, such achievements largely resulted from a global commodity supercycle—rising prices on global raw material markets. Reliance on this singular growth model proved unsustainable long-term, necessitating new strategies to reduce external financial dependencies and diversify Kazakhstan’s economic foundations (Bibi, 2024). The service sector should constitute a core element of diversification strategies for resource-dependent nations. Enhancing this sector not only improves petroleum industry efficiency but also increases fiscal revenues from oil rents. These conclusions derive from an analysis of Kazakhstan’s economic conditions, while the UAE’s effective service sector expansion provides empirical validation (Atakhanova, 2021).

Policymakers and global experts consider “clean” hydrogen to be a promising solution for addressing the climate crisis. Several major oil and gas exporting countries share this optimism and are investing substantial resources in hydrogen infrastructure to position themselves as future global hubs. Countries such as Oman, Saudi Arabia, and the UAE hold particularly advantageous positions, benefiting from strategic advantages compared to other hydrogen-producing regions in the Global South (Zumbraegel, 2025).

There is also broad agreement that multilateral relations in energy diplomacy more effectively enhance long-term energy security and economic prosperity for individual states by strengthening international connections related to energy consumption and supply. This perspective is also reflected in the present study. Just as in the case of other Gulf states, a principal challenge for the UAE’s energy diplomacy amid the transition to a low-carbon economy is the creation of new business models to monetize hydrocarbon resources. Concurrently, it is imperative to ensure that economic diversification strategies effectively reduce reliance on oil export revenues (Griffiths, 2019).

The global transition to renewable energy systems has acquired critical importance in contemporary contexts. This shift requires Gulf countries to consider not only domestic resources but also external demand trends and the influence of emerging technologies when shaping their energy policies. Accordingly, proposed national strategies should align with global decarbonization objectives and adapt to the evolving structure of world demand for hydrocarbons.

The recommendations developed for Saudi Arabia and Kuwait emphasize the formulation of proactive energy policies focused on economic diversification and the strengthening of institutional mechanisms for managing oil revenues. For the UAE, accelerating the transition toward a service-oriented and clean energy economy is advantageous. For Oman, consistent economic diversification through the development of advanced oil refining and support for small and medium-sized enterprises is advisable.

The choice of policy instruments and the pace of implementation should correspond to each country’s fiscal capacity and social priorities. Moreover, all national development programs should incorporate mechanisms for monitoring effectiveness and adapting to external global challenges.

The case study of UAE and other Persian Gulf countries energy policy and diplomacy incorporated a methodological approach combining qualitative and quantitative methods energy policy and diplomacy, as well as strategies employed by other countries, vividly demonstrates the global significance of these processes. The research data reveal that the UAE has consolidated its position in global markets as an innovation-driven ecosystem and a prime location for both established and emerging technology companies. This achievement stems from sustained investments in digital infrastructure and the implementation of supportive regulatory frameworks that foster an enabling environment for innovation, growth, and alternative energy advancement.

The comprehensive examination of economic transformations and related political and diplomatic processes in the UAE made it possible to construct predictive models and scenarios. The analysis elucidated potential progress trajectories and their implications for the UAE. The case under study exemplifies how integrating technological solutions and sustainable practices into contemporary energy policy can simultaneously drive economic progress and enhance international standing. The study further underscores the critical role of global diplomatic initiatives in establishing knowledge and technology transfer partnerships, which constitute a pivotal factor in contemporary evolutionary paradigms. Diversification policies have led to positive economic outcomes, with GDP expanding from $104.3 billion in 2000 to $514.1 billion in 2023. Concurrently, investment inflows nearly tripled, reaching $30.7 billion.

The world oil price and global energy intensity substantially determine short-term fluctuations in the UAE’s GDP and exports. An analysis of their dynamics indicates a positive correlation with a temporal lag. Oil production primarily functions as a long-term factor (with a cointegration coefficient of −372.10), yet in the short term, it exhibits minimal responsiveness and is poorly explained by the current model regressors. Changes in energy intensity reflect technological innovation, which acts as an endogenous shock for resource-dependent economies. In this case, the effect is explained by the global increase in energy efficiency, which reduces oil consumption per unit of GDP and shifts demand toward hydrocarbons.

An analysis of the proposed short-term economic development models for the UAE indicates that the gradual expansion of high-value-added sectors represents the most effective strategy for transitioning from resource dependence to an innovation-driven economy. Projections suggest that this approach will prove particularly advantageous in the medium- and long-term perspectives, especially when coupled with accelerated growth in high-technology exports. The practical applicability of these research findings lies in their potential utilization for studying other resource-dependent nations and formulating recommendations for economic diversification.