19_Dubai_Overhead Slides

United Arab Emirates and Dubai:
United Arab Emirates (UAE) – a federation of 7 states (or
emirates) in the southeastern portion of the Arabian
Peninsula, along the Persian Gulf.
 large deposits of oil and natural gas
 has attracted a substantial amount of foreign direct
investment, starting in the 1970’s
United Arab Emirates:
Area = 32,278 sq. miles (just larger than South Carolina)
Pop. = 4,621,399 (just less than Alabama)
Annual GDP Growth Rate = 8.5%
Unemployment Rate = 2.4%
Inflation Rate = 12.0%
GDP per capita (PPP) = $55,200
Life Expectancy at Birth = 75.89
Dubai – one of the 7 emirates of the UAE
Area = 1,588 square miles (about the size of Rhode Island)
Pop. = 2,262,000 (between New Mexico and Nevada)
Oil and Natural Gas:
 Historically, much of Dubai’s wealth initially came
from production of oil and natural gas
 However, these goods currently account for less than
6% of Dubai’s GDP
 Further, Dubai’s oil reserves are expected to be
exhausted within 20 years
In recent decades, Dubai has very rapidly transformed from
an “oil dependent economy” into a transportation hub, a
business center, and a tourist destination.
Projects recently completed or currently under
construction in Dubai:
 Ski Dubai – one of the World’s largest indoor ski
 Dubai Mall – the world’s largest shopping mall
 Burj Al Arab – the “world’s most luxurious and
expensive hotel,” built on an artificial island 919 feet
out from the beach
 Burj Dubai – a supertall skyscraper currently under
construction (expected to be completed in 2009),
which is already the tallest manmade structure of any
kind in the world by a wide margin (height of 2,320
feet as of 9/26/2008)
 “The World” real estate development – a man made
archipelago of 300 islands constructed off the coast of
Dubai in the shape of the world (one in a series of
“Artificial Island Projects” in Dubai)
Burj Dubai
Burj Al Arab
Dubai's Sheikh Zayed Road
Dubai is desirable business environment for international
corporations, in part because of its geographic location:
 Halfway between the financial centers of London and
 1.5 billion people within a 3 hour plane flight
 The perfect jumping off point to tap into the emerging
markets of Southeast Asia
Mohammed bin Rashid Al Maktoum – current ruler of
Dubai, since January 2006; a member of the Al Maktoum
dynasty, the family which has ruled Dubai since 1833;
estimated wealth of $18 billion (making him the world’s 5th
richest royal).
Economic development and investment taking place in
Dubai at an astonishing rate => Mohammed bin Rashid Al
Maktoum: “I want my people to live a better life now – the
highest schools…and good healthcare now – not after
twenty years.”
Reasons for Economic Development/Growth:
 “Industry Specific Free Trade Zones,” with no taxes,
minimal regulation, and other special incentives =>
helped make Dubai an international center for finance
and media (e.g., “Dubai Internet City” which has
attracted firms such as Microsoft, IBM, Oracle, Sun
Microsystems, Cisco, HP, and Nokia)
 The Maktoum family “articulated a strong case for
investing in Dubai” and “jump started the
development with their own investment.”
Recent experience of Dubai illustrates what can be done if
a family with a tremendous amount of oil wealth bankrolls
development, but the big question is “will it stick?” (i.e.,
“will it be self-sustaining?”)
Why can’t other Arab countries and other Middle
Eastern countries “copy Dubai”?
 A “lack of vision, heavy bureaucracy, lousy
governments, and corruption.”
Issues of Concern for Dubai:
 Conflict between traditional, middle eastern culture
and modern, western culture
 Many immigrants coming from democracies, although
Dubai still lacks complete political freedom and has
restrictions on freedom of expression
 Labor relations and exploitation of workers – much of
the development is being built by contract workers
brought in from Southeast Asia, who work 12 hour
shifts, 6 days per week, for $4 or $5 per day (it’s better
than what they could make in their home countries,