At the beginning of the 20th century, the primary source of economic activity was the trade in pearls. However, World War I, the Great Depression, and the Japanese creation of the cultured pearl resulted in a significant weakening of the industry of pearls. The high tax on pearls imported into the Gulf after World War II by India led to its decline irreparably. This led to a number of began to seek out accounting services in abudubai. However, with a lack of education and no roads or hospitals, the outlook was dim. In the 1930s the first oil corporation arrived in the region and began conducting research in Abu Dhabi. The year 1962 saw Abu Dhabi exported its first crude oil shipment which would play an important role in the UAE's development.

Since the 1820s, the English had maintained a presence in this region. In 1853, Britain entered the region due to threats from pirates and negotiated a financial services in abudubai permanent truce in order to safeguard and supervise the execution of foreign policy. It was clearly stated that Britain would not colonize the region. The agreement was reached together with a group of people known as the Trucial States that were a collection of sheikdoms in the Persian Gulf. The Trucial States were sometimes referred to the Trucial Colony comprised of present-day Bahrain, Qatar, UAE and Oman. After a period of Arab nationalism and anti-British activism that started in the 1940s, and 1950s The British eventually renounced the administration of the region in the year 1971.

On December 2, 1971 The UAE was established by combining seven of the Trucial States under a unified Constituent: Abu Dhabi, Dubai, Sharjah, Ajman, Umm al Qaiwain, Ras al-Khaimah and Fujairah. Abu Dhabi is the largest of the former territories and is the federal capital. Dubai is the second-largest of the emirates. It's the primary commercial and port center, as well as the airport's hub. The five other emirates are small areas that realize economic and political benefits by forming alliances with the larger neighboring countries, Abu Dhabi and Dubai. The seven states are all ruled by Sunnis.

The UAE is believed by some as an autocracy. This is a type of government that allows one person to have all power. It has also seen lower political reform in the country than in some other Gulf States, even Saudi Arabia. International non-governmental organisations (NGOs) have identified UAE UAE as having among the least democratic political systems around the globe. In particular, these researches have revealed the existence of the 'sheikh's dilemma' in the UAE, in which changes in the political system, but not the economy, is pursued. To keep peace, a 'ruling agreement is followed in which the UAE government allocates oil wealth equally, and at the same time using a variety spiritual, ideological and cultural resources. Others state that the UAE is a monarchy-based state led by ruling families on Neo-patrimonial lines.

Following the British withdrawal following the withdrawal of Britain, the Sheikh Zayed bin Sultan Al Nahyan became The first president. Sheikh Zayed who was previously the Emir (or leader) of Abu Dhabi, ruled as the UAE's president for more than thirty years until his death on November 2nd, 2004. Because of the oil industry Heikh Zayed was one of the wealthiest individuals in the world with an estimated net worth of over $44 billion (USD). After his demise, the youngest brother of Sheikh Zayed Sheikh Khalifa bin Zayed Al Nahyan became President of the UAE. Heikh Khalifa is the world's third richest member of a royal family, having an estimated net worth of $19 billion (USD). The president of the UAE is decided by the Federal Supreme Court (FSC), a governmental entity in the UAE instead of through an electoral or popular vote. Political parties are strictly prohibited.

The UAE's highest authorities is called that of the Supreme Council of Rulers (SCR). The SCR has the power to initiate policy and refuse laws that have been previously passed. Seven hereditary rulers, and occasionally their crown princes as well as their closest advisors have control of this governing body. Subordinate to the SCR is the Federal Council of Ministers (COM). The bulk of UAE's policies and everyday affairs are developed by the COM which has more regular meetings and is more formal than the SCR. The judiciary branch of government is administered by the Union Supreme Court. Judges are appointed directly by the UAE president.

The FSC is the most powerful constitutional power in UAE and has both legislative and executive powers. In charge of the FSC are the rulers from any of the seven emirates. Alongside the FSC there are civil and Islam courts in all seven emirates. The secular courts of the UAE rule on more civil, criminal, and commercial issues. Religious and family disputes are heard by Islamic courts. Each emirate is home to its own government with departments and municipalities.