It is really no surprise that Dubai became a boom town during the 2000's. This amazing growth is evident in a look at the period following 1990 in which tremendous economic and demographic changes occurred within Dubai and the UAE. This article will outline what some of these developments included and why they happened. It is important to note however, Dubai was not immune to global economics and a correction its economy also occurred after the credit crisis of the late 2000's.
Economic and demographic developments after 1990
Statistically the evidence that Dubai grew a very large amount after 1990 is ample. National population increased by 3.03 million people between 1990-2008 from a 1990 population of 1.59 million (zum.de) to 4.62 million in 2008. (cia.gov). Much of this population growth was centered around Dubai. Moreover, the United Arab Emirates experienced a jump in gross domestic product from $34 billion in 1990 to $186.8 Billion in 2008. (state.gov)
Moreover, investment in national infrastructure such as logistics also increased, an example being the Dubai Metro rail transit system, numerous industry specific development cities and extensive liberalization of financial services within Dubai's self regulated financial center. Much of Dubai's economic growth was assisted by 1) oil reserves that both created a cheap source of energy for desalinization projects, and economic growth and 2) export income. This provided Dubai's rulers to have a stable source of income in order to fuel forward thinking economic growth.
Causes for Dubai's tremendous growth
• Oil reserves
Up until recently, oil has been a major contributor to Dubai's success, however it has been more of an economic springboard than a staple resource. This is so primarily to the limited oil reserves Dubai has in relation to other Emirates in the UAE such as Abu Dhabi.
• Property development
The real estate boom in Dubai was unprecedented up until late 2008-2009, after which it continued growth. The Burj Dubai, The Palm Jumeirah, the Burj Al Arab, and many more profound and highly evolved architectural structures captivated tourists and World watchers alike and a massive increase in residential and commercial real estate pointed to a fast expanding Nation-State.
• Tourism
Tourism has been an important part of Dubai's economic history and development. This is so as Dubai's economic mission was to diversify its economy so that it wouldn't be dependent on any one resources or industry. Such being the case, Dubai's tourism constitutes more than two thirds of the UAE's national tourism industry (nationsencyclopedia.com) and is spurred by hotel, leisure, entertainment and shopping venues.
• Shipping and trade
Dubai's deep water port, regional location, commercial and logistics infrastructure facilitated extensive trade via imports and exports adding to the diversity of Dubai's economy. Furthermore, the UAE's membership into the World Trade Organization in 1995 helped Dubai obtain the trade allowances and goals it had set for itself. (archive.gulfnews.com)
• Infrastructural development
The high rate of infrastructural development has helped facilitate and enable Dubai's growth. This is also indicated by the UAE's high volume of imported machinery, equipment and logistics hardware which according to the US Department of State amounted to near 70% of the UAE's imports. Additionally, the rise of numerous airports including Dubai International Airport,
• Commercial development
Regional modernization, consulting and marketing hub via commercial sites such as Internet city, Dubai International Academic City, Dubai media city and others such as sports city. Commercial development also included heavy national investment in manufacturing for export and local use, mostly in Abu Dhabi, but also in Dubai.
• Financial services
In 2005 the Dubai Securities Trading Market (DIFX) opened for business indicating the evolution of Dubai's financial system. The DIFX was the financial brain child of the Dubai International Financial Centre's Authority (DIFC) in an attempt to both allow and facilitate a modern financial center capable of meeting the financial demands, needs and expectations of the regional economic hub.
• Legal and regulatory structure
The legal and regulatory structure of Dubai is the most international friendly of all the emirates. It changed its property ownership laws in 2004 to allow freehold property ownership and allows large foreign corporations to own up to 100% of their corporation. Furthermore, Dubai's free trade zone attracted numerous large and established businesses such as fortune 500 companies due its 0% tax policy on capital gains, property, and income.
Summary
Dubai's growth from 1990 onwards had to do with a favorable national, commercial and international nexus of government regulation, commercial far sightedness, heavy local and international investment and commitment to economic development and an increase in the pre-existing commercial hub's development. These changes are documented and marked in addition to being a somewhat accelerated growth phase in which the economy moved in the direction of a post-industrial economy from an industrial economy.
As of 2008 61.8% of the UAE's GDP was industry based while only 36.6% was service based according to the CIA world fact book. However, in 1990, the service industry was smaller and the economic and infrastructural development of both the UAE and Dubai was less developed. Moreover, since 1990, progress in many targeted sectors of Dubai's economy, fueled by a wealthy Government rich from oil revenue, has been achieved. This is so in part from liberal financial policies, but also economic vision and dedication to implementation of that vision.
Sources:
1. http://www.state.gov/r/pa/ei/bgn/5444.htm#econ
2. http://www.state.gov/outofdate/bgn/u/8203.htm
3. http://www.nationsencyclopedia.com/economies/Asia-and-the-Pacific/United-Arab-Emirates-COUNTRY-HISTORY-AND-ECONOMIC-DEVELOPMENT.html
4. http://www.difc.ae/district/facts_and_figures/
5. http://www.zum.de/whkmla/region/arabworld/uaesince1990.html
6. https://www.cia.gov/library/publications/the-world-factbook/geos/ae.html
7. http://www.nationsencyclopedia.com/economies/Asia-and-the-Pacific/United-Arab-Emirates.html
8. http://archive.gulfnews.com/indepth/uaenationalday/more_stories/10086232.html
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