United Arab Emirates Federal Budgetary Process: The Decision-Making Styles

Article excerpt

ABSTRACT. The paper concentrates on the administrative side of the United Arab Emirates (UAE) budgetary process and employs a quantitative approach to test two major hypotheses about the style of decision making and the impact of this style on annual estimations of public expenditures. Therefore, the major question of the paper is not concerned with the content of these decisions (annual estimations) in a substantive descriptive and normative manner, as in public finance studies, but rather with the analysis of the outcomes of these decisions. The paper uses data from annual budgetary allocations to test certain hypotheses and concludes that UAE budgetary decision-makers in United Arab Emirates Federal ministries use an incremental style of decision-making to estimate their annual expenditure.

INTRODUCTION

The major objective of this paper is to analyze and test hypotheses about the style of decision-making in the United Arab Emirates (UAE) federal government budgetary process. Specifically, the paper concentrates on the administrative side of the budgetary process; and employs a quantitative approach to study the style of decision-making and the impact of this style on the annual estimations of public expenditures in the federal budget. Therefore, the major question of the paper is not concerned with the content of these decisions (annual estimations) in a substantive descriptive and normative manner, as in public finance studies, but rather with the analysis of the outcomes of these decisions. This approach relates the decisions of the government budget to the agenda of public policy because public budgeting is a process of resource allocations for public goals (William, 1980, p. 320). In fact a budget is a mirror which reflects government policies and how those policies are funded.

The United Arab Emirates emerged as an independent state in 1971. The UAE political system is a federal one composed of a federal government and seven highly autonomous Emirates governments (i.e. governorates sing, in Arabic (Emara). These are Abu Dhabi, Dubai, Shargah, Ajman, Ummelqwain, Rasellkhaima, and Alfujaira. Each Emara has a governor. The government has three layers of administration: the federal, the Emara and the local municipality levels. The UAE Constitution created a relatively weak federal government with limited political powers and revenues. Constitutionally the federal government revenues come mainly from the annual contributions of the seven Emirates governments and its self-generated revenues. In practice only the rich Abu Dhabi and Dubai contribute to the federal budget. The former contributes over 85% of the federal revenues.

Incrementalism in UAE federal budget is facilitated by two major factors which contribute to complexity in the decision making processes. These are the structure of government and the budget time span. The first factor is related to the policy making processes in which informal and formal structures combine to make the system highly pluralistic and complex. The informal structure of government consists of networks of patron client relationships. Each Emara has a governor who is usually the sheikh of the strongest tribe and at the same time a member of the Supreme Council of Emirates Governors which is the supreme legislative body in the country. Sub sheikhs of smaller tribes work to connect their followers to the governors and represent channels for demands for services and benefits. Since sheikhs and sub sheikhs occupy official positions in the federal government, the informal patron-client structure is integrated in the formal one without losing its clear identity. This situation puts considerable pressures on the federal budget especially for services and employment. Since annual budget allocations establish benefits for different social groups it is very difficult to change them drastically without disrupting the patron-client relationship.

The second factor is related to the time span of the fiscal year in UAE which starts in January. …