The UAE has accomplished remarkable economic growth and made considerable progress in diversifying its economy over the past four decades as a result of many policies that support economic diversification. These have included the development of infrastructure, improving education and health, enhancing the business environment and improving access to trade. The most appropriate means to study the role of institutions in the economic diversification of countries and regions is through a mix of quantitative and qualitative research. The evolution of the UAE economy represents a remarkable success story; it achieved continuous economic growth and transformed its services, products and industries, but its future economic growth and sustainability depends on the country's ability to move into advanced technological areas. The traditional method of measuring diversification in association with economic development is based on income distribution, involving the aggregated variables of GDP. Clustering through Special Economic Zones (SEZs) is the form of economic diversification mechanism in Abu Dhabi.