Twenty years ago the UAE was one of the least developed countries of the world. Now, the UAE has achieved an income level comparable to that of the industrialized countries. The UAE did not pass through the hypothetical development "stages" that most developed countries are argued to have passed through. Rather, the UAE's large oil-revenues have enabled her to move immediately to the stage of high mass consumption. However, the UAE is still dependent on the export of a single depletable product, oil, and would be unable to maintain its economic growth if there were to be a fall in oil prices. Looking ahead to the economic development of the UAE in the twenty-first century, this thesis reviews alternative strategies of development that take into account new insights from economics and social science. The thesis explores a possible role for exports of services from the UAE, to diversify the economy and to sustain economic development. It is claimed in the thesis that there is a link between international trade in services and induced "knowledge-based" growth, which can contribute to development. The thesis concludes that a development strategy based on knowledge-based services could diversify the sources of national income in the UAE and sustain long-run economic growth performance. It explores further the policy implications of such a development strategy.