Dubai: A unique economic model
unmatched in a volatile region

If there is a place in the world today that deserves the title “universal capital of globalization” it would be Dubai. The rapid growth of this city-state emirate has exceeded all expectations and continues to challenge those economists and business strategists who talk about a “financial bubble” bursting any minute. Not only has the economy proven to be on solid ground, the political and security situation in Dubai has also remained intact in a highly volatile and unstable region.
A lot has been said about the reasons behind the success of Dubai. Some attribute it to the vision of its leadership from the time of Sheikh Rashid al-Maktoum until the present reign of his son Sheikh Mohammed. It was Sheikh Rashid who initiated the idea of building the Jebel Ali Port that has expanded with time to become a major regional seaport. The free zone business model was utilized by the leadership to the extreme, resulting in the birth of several thematic free zone cities like Dubai Media City, Dubai Internet City, Dubai Healthcare City and many others. Extravagant shopping malls and luxurious hotels have made Dubai a favorite site for millions of tourists.
Top professionals from all business fields and domains are either based in Dubai or deal with companies there. Walking anywhere in Dubai is like taking a stroll in a United Nations facility where many foreign languages are heard simultaneously.
The vision was not fully based on “build it and they will come”. It was also based on providing incentives to attract foreign direct investments and major multinational companies. These incentives came in various forms and shapes, but the most important were:
* Corruption-free efficient bureaucracy in the public sector, a rare or non-existent phenomenon in the Middle East in general.
* No taxes and low tariffs that proved extremely attractive to western companies and expatriates.
* A hyper-free market economy with low restrictions on movement of funds and transactions. Old fashioned wire-transfer systems, hawala, still exist next to modern banking systems.
* Establishing high-tech state-of-the-art infrastructure to sustain a prosperous electronic-based economic system and e-government.
* Government support, direct or indirect, to all major economic projects to ensure their success at reasonable costs.
* Sharing the wealth with the local Emirati people in order to ensure political stability and wide public support for the government.
* Maintaining a good security record of zero major incidents by investing heavily in the Emirate’s security apparatus.
* Easy and quick processes to issue visas to businessmen and visitors.
* Allowing foreigners to own property in free zone areas.
The “Dubai Model” has become a big attraction to neighboring Arab countries, especially in the Gulf region. It offers a way of life that appeals to many people, except power-crazy regimes and rulers who only like to do business in Dubai but without imitating it.
Leaders in some neighboring countries are still resisting reforms to their political and economic systems and are waiting to see the long-term results of the Dubai experience before they make their judgment. Still, a few Arab leaders are trying to imitate Dubai, but with little success largely due to lack of incentives, socio-political instability and the continued growth of Dubai itself.
Challenges for Dubai are growing along with its size. The booming real estate business has brought in more Asian workers, and a free press has created more transparency and fame that have placed the city-state in the international spotlight. Hence, Dubai now has an image to preserve that includes high moral values and responsibilities to the international community.
Under the new conditions, old tribal traditions of favoritism and special privileges have conceded to the rule of law, especially when having to deal openly with labor issues and sensitive cases like sex crimes.
Nevertheless, firmness against troublemakers has remained central and the practice of deporting convicted offenders and criminals has “kept rotten apples out”, leaving the city free of misfits.
Dubai has managed to keep a fairly good balance in its relations with the outside world. Major Chinese, Russian and Indian companies share the same ground with their western counterparts. Iran continues to find in Dubai breathing space for its economy despite persistent pressure from Washington to curb the finances of Iranian officials. The ongoing dispute between Tehran and Abu Dhabi has not undermined the strong economic relations between the two countries, especially Dubai.
Al-Qaeda and its affiliated terrorist groups occasionally mention Dubai on their website with concealed threats. Some official sources have spoken of attempts by extremist groups against western targets that were foiled by vigilant security forces, but with no independent confirmation. Yet the threat exists, as does the possibility of war between Iran and the United States.
Dubai leaders watch anxiously as their city-state grows in size and strength unhampered by the troubles of the region. Nobody seems to know how much Dubai would be affected or harmed by a terrorist attack or a regional war. However, most experts seem to agree that an incident in the world’s capital of globalization would most likely impact both the world’s economy and the city’s way of life. Hence it would only be logical to assume that harming Dubai would not be in anybody’s interest, including the bad guys.