Dubai Strategic Industrialization Economic System

Introduction

This research looks at the strategic industrialization economic system of Dubai. Being a student of IR as well as a citizen of the United Arab Emirates, I ought to have extensive knowledge about the country that I belong to and especially if I am planning to represent my country one day. Moving from a personal level to an international level, rapid industrialization has impacted almost every country that trades with the United Arab Emirates (UAE). Every country went through a rapid industrialization era, for example, the economic boom in the United States during the 19th century or Germany during the reign of Hitler. Each country dealt with its industrialization age differently. This research explores how my country dealt with its rapid industrialization, the impacts, both positive and negative, and how they managed them (Masdar 2).

The plan for this research will be to discover the impacts of the rapid industrialization in Dubai. To understand them most of the information gained will be categorized; first by stating which are positive and why then move to the negative impacts. To understand each side of the story, various examples that are available and those that I witnessed during my lifetime will be looked at. One way of doing this is by watching debates, asking public officials, and also reading and critically analyzing articles by scholars who have related writings on the same situation. From this, a thesis will be created after analyzing both sides of the situation. Other sources published from the UAE’s government will be looked at by contacting the UAE embassy officials in Washington DC and also using outside scholars to confirm the information to avoid any biases whatsoever.

Background Information

Dubai’s industrial age became very popular among businessmen around the world as everyone wanted to get their hands on a piece of the new market. The rapid industrialization not only affects the UAE on a domestic scale but also on an international level boosting its position as one of the global economic leaders. Due to the rapid expansion of industrialization, several problems come in handy. However, in comparison to the number of positive impacts, the negatives are heavily outweighed. Nevertheless, for every action there is always an opposite negative force acting in the other direction thus the usage of analytical and systematic procedures helps to reduce them. My main concepts are focused on the positive impacts on the commercial infrastructure, education, employment, tourism industry, industrialization, and politics but also looking at the negative impacts including the violation of human and labor rights; increased pollution, the environment; loss of culture, language, neighborhoods, and uncertainty of the future economy.

The pace of the economic growth in Dubai in the last two decades has been incredible with increased prospects due to the extensive projects that are currently being established. As a result, the government and the legislative institutions have been designed to minimize bureaucracy and create a business-friendly environment for all the investors. This has led to increased property development and ownership, increased capitalism, and the general growth of the economy (Explorer Publishing 36). However, rapid industrialization leads to some negative effects that include cultural decadence, overpopulation, and drastic economic growth that is at the risk of immense collapse. Culture is the way of life of a people and any society should uphold and maintain its culture for the present and future generations to come. The decadence of culture is usually associated with the modernization of society. On the other hand, overpopulation is a threat to industrialization since there will be competition for the available social amenities in society. There are also many instances of human rights abuses especially towards a large number of immigrant workers. Immigrants usually come to find an alternative form of survival due to the tough lifestyle in their motherland. In some cases, they are usually subjected to all manner of inhuman treatment and at times torture (UAE interact, 2010).

Research question

Has the rapid industrialisation of Dubai led to any effects in the country’s social, economical, political and cultural?

Hypothesis

• The rapid industrialisation of Dubai’s economy does not have any impacts on the nation.

Literature review

The rapid industrialization of Dubai has left many countries wondering how they can strategically industrialize their economic systems. The literature review will provide benefits and sacrifices that a nation should anticipate to incur in the event of rapid industrialization. The process is overwhelming and therefore, demands the use of analytical and systemic procedures to attain optimum benefits. Moreover, since the United Arab Emirates is among countries that underwent through rapid industrialization and plays great role in the world economies, her case studies will give in-depth economic strategies of industrialization to the developing countries.

Although the rapid expansion of industrialization has great positive implications, there are some negative implications as well. This literature review will focus on positive implications on infrastructure, employment, tourism industry, and political stability, as well as negative implications such as violation of human and labor rights, increased pollution on the environment, loss of culture, and uncertainty of the future economy.

The Positive Implications

Industrialization in Dubai started in the 1970s and this has led to numerous benefits including increased economical growth. The social economic and political standard of the country has improved with the development of excellent banking, education, transportation, commercial, tourism, manufacturing industry, and increased employment (Ghanem 260). These frameworks led to the rapid industrialization of the United Arab Emirates translating into great economic benefits to the country.

The trading industry in Dubai started in the nineteenth century with the concession of taxes by the rulers that forced rapid immigration into the country by investors. Later in the twentieth century, the country specialized in the importation and exportation of goods with a major gold business with India and this helped in strengthening the industrial department and in turn, the stability of the country’s economy (Schrage 12). With a very bright vision, the country was able to upgrade the national infrastructure and this paved way for the increased development that is evident today. (Christopher 35). However, some may argue that, very rapid economic growth in capitalism system without sufficient regulation makes the economy sterile, and this kind of economy can easily collapse as in the case of Dubai (Anand 140). Due to impending economic challenges, there is expeditious control over the markets to effectively regulate and maintain the long-term sustainability and reduce the wastage of human labor.

The United Arab Emirates government invested about a quarter of its gross domestic product on transport and communication infrastructure. According to Zahlan during the 1970s and the 1980s, the physical infrastructural growth continued to increase unabatedly because the government spent as much as 25% of the country’s gross domestic product in building and improving road networks and seaports ((276). Industrialization efforts organized the transport system within the city to reduce traffic congestion using bridges, floating roads, underneath tunnels, waterbuses, and taxis (Ibrahim 45). The country’s port is currently among the top ten container terminal ports in the world (Nawar 36), while the air transport is “ranked among the top fifteen air cargo hubs and among the busiest airports” (Christopher 56). Furthermore, Dubai has embraced and advanced modern technology of communication in extensive marketing overseas and e-commerce thus enhancing efficiency in transactions. These factors have positioned Dubai as a global business hub with an efficient infrastructure.

Unlike other countries, where unemployment has emanated from the current economic crisis, the unemployment in Dubai is mainly due to the qualifications of an individual, job preference, salary scale, and expectations rather than lack of employment (Christopher 65). The tourism industry is expanding exponentially thus attracting more tourists thus creating more job opportunities. Although Arabic and Islamic traditions dominantly influence the culture of Dubai, industrialization has shaped the society in that; there is freedom of religion, liberalization of dressing cord and gender equality (Christopher 67). Various nationalities in Dubai work harmoniously irrespective of their religions. According to Ghanem “Undoubtedly, oil and the federation were the two most important factors in the transformation of the seven emirates politically, economically, socially and culturally, from a collection of subsistence desert sheikhdoms into a federated group of modern city states” (263). The political system of federations and government policies transformed Dubai industrially.

The Negative Implications

Research studies show that, rapid industrialization has negative implications to any environment and the society. The negative implications include; increased pollution of the environment, loss of culture, the violation of human, and labor rights and the uncertainty of the future economy. In spite of the governments’ efforts to comply with the international laws of environmental conservation, industrialization still cause inevitable pollution to air, soil and water due to the hazardous effluents from the industries (Smith 41). Increased pollution of the environment will result into reduction of biodiversity and depletion of the ozone layer, thus affecting the balance of the ecosystem.

Culturally and religion wise, the rapid economic development has led to the changes in the lifestyles of different people. The multinational cultures have slowly led to the decay of the mother cultures of the society. However, the country’s rulers are committed to the safe guarding of their heritage against erosion (Smith 45). To safeguard culture is a futile process since diverse cultures and religions spontaneously interact causing evolution of the native culture.

The obvious interpretation of industrialization means economic stability; however, critical analysis has proved that exponential growth of the economy is normally associated with economic instability. Economic experts argue that, lucrative capitalism and rapid economic growth without sufficient regulation makes any economy sterile, and this kind of economy can easily collapse as in the case of Dubai (Anand 140). To reduce the risk of economic collapse the government embarked on the diversification of the industrial sector (Sharafi 8). The industrial diversification into tourism and commercial sectors led to the increased job opportunities and employment for both the nationals and the multi nationals making Dubai to be an economic hub of the emirates region.

Although the rapid industrialization provided diverse job opportunities to the immigrants, the Human Rights Watch has reported that the government has failed to stop employers from seriously abusing the rights of the country’s half million migrant construction workers (Sharafi 2). The claims of workers’ abuses include hazardous working environment, low salaries, withholding of wages and passports by the employers amongst other labor rights abuses but hardly are these abuses highlighted in the literature.

Discussion

The strategic industrialization economic system and its double impacts on Dubai

Dubai Emirate is located along the Arabian Gulf, being the second largest member of the United Arab Emirates in area its population comprises of about four million people. Dubai is classified as one of the fastest developing economy in the world boasting of a US$ 82.11 billion economy. Presently, the city is classified at position 27 out of 60 global cities of the world. The economy of Dubai was initially built on the oil industry but the industry is no longer the main revenue earner which currently stands at 6%. The main drivers of the economy in Dubai are property, tourism, and various other financial services (Central Intelligence Agency, 2010).

The positive impacts of Dubai rapid industrialization

Industrialization in Dubai started in the 1970s and this has led to numerous benefits and the expeditious operations of the government with increased economical growth. The social economic and political standard of the country has improved with the development of excellent banking, education, transportation, commercial, tourism, manufacturing industry and increased employment. All this is of benefit to the national community and should be further encouraged (Samir 1).

The rapid industrialization has positive effects and economic benefits to the country. The trading industry in Dubai started in the nineteenth century with the concession of taxes by the rulers that forced rapid immigration into the country by investors. Later in the twentieth century the country specialized in the importation and exportation of goods with a major gold business with India and this helped in strengthening the industrial department and in turn the stability of the country’s economy. With a very bright vision, the country was able to upgrade the national infrastructure and this paved way to the increased development that is evident today (Davidson 57). However, some may argue that very rapid capitalism and economic growth without sufficient regulation makes the economy sterile and this kind of economy can easily collapse where they categorize Dubai also. But there is the expeditious control over the markets to effectively regulate and maintain the long term sustainability and reduce the wastage of human labour. This increased growth will lead to the motivation of the markets but the monetary policies works effectively to control this. Industrialization also removes boundaries regarding trade among countries hence products prices go down due to few restrictions on global trade.

During the 1970s and the 1980s, the physical infrastructural growth continued to increase unabatedly with as much as 25% of the country’s GDP being spent on building and improvement of the sea ports and the roads network. This includes the 150 mile highway along the coast that connects Abu Dhabi and Dubai. This offers a dependable and an efficient means of transport that provides a peripheral route especially for the heavy commercial trucks. This is very beneficial for the increased efficiency and also effective transportation and communication (Explorer publishing 36).

Transport usually consumes a lot of human resource time if not properly addressed and carefully planned. Through industrialization, the transport within the city was organized with reduced traffic congestion; through the use of bridges across the creeks including the establishment of a floating road. The cities have numerous tunnels that are also underneath the airport runways. There is the use of water buses and water taxis that offer alternative means of water transport. The transport sector has gone a mile higher through the connection of the sea transport with the airport system through the empowerment from Canadian and Japanese firms. The sea transport has the advantage of being cheap and bulk commodities can be carried at a go unlike air transport. The mass transport system in Dubai that is predicted to be completed this year is aimed at solving the long term problem in the transport sector (Davidson 56).

However, it is not only the inland transport system that has been streamlined; the marine system is also very efficient with the merging of the “Dubai Ports Authority with the Dubai Ports International.” This has helped in the expansion and globalization of services. The country is among the top ten container terminal ports of the world. The air transport system is also well equipped and this makes it efficient and very effective for business (Little 4). This also attracts a lot of international investors where they are sure of no delay in their products. Think of tourism also on the other hand, as a result, the Emirates Airline has expanded continuously and is registering a lot of profits every year. This has positioned Dubai as a global hub with an efficient infrastructure. On completion as vision at 2017, the New Dubai World Central Airport will be the fourth largest in the world and this will greatly improve the trade industry and tourism in the country. Presently, “it is ranked among the top fifteen air cargo hubs and among the busiest airports” (Davidson 235). This has heavily increased the resources in the construction industry.

The Commercial Infrastructure

The world is moving towards globalization where industrialization and information technology are among the major factors accelerating this. Information is power and when equipped with information one is capable of transforming the way of conducting business rapidly. Technology has turned the whole world into a small village with the capability of navigating through and across the world with the click of a button (Nawar 32). Industrialization in Dubai has led to the massive growth in the commercial infrastructure with the increased growth in the number and also the size of the shopping malls. Some are being run by government backed – parastatals and others are owned by the merchant families. This has led to the booming of the various trades and the healthy competition from the various malls. A healthy market starts with many factors among these and brightens the future for the commercial sector, where the government has further increased support by the building of the non physical supporting infrastructure thus creating new opportunities for the business community.

The country is utilizing modern technology for the extensive marketing overseas and the use of e-commerce has led to increased confidence in the sector where the banking sector has also been streamlined and consolidated for the efficiency in transactions. The country has therefore become a major business centre in the region with increase in globalization and market integration thus acting as the regional hub. To increase the number of investors in the country and facilitate the long term sustainability, the business registration procedure is simple both for the international companies and individuals. This is a very effective marketing strategy (Explorer publishing 3).

Employment

The global crisis has led to massive unemployment in many global countries. Industrialization in the UAE has worked well in provision of employment to both local and international workers. The unemployed population is mainly due to qualifications of the individual job preference, salary scale and expectations and the skills. The unemployment rate has however reduced where in future; the government aims at the less reliance on the expert workforce and increasing the national’s employment. Industrialization has opened way for the emergence of various job opportunities. For an individual to be independent and be able to cater for his/her own needs he/she should be having a reliable source of income and thus the need to be employed. Industrialization is the mother for investment opportunities that have lead to the increase in the employment (Davidson 62).

Tourism Industry

Industrialization has led to the development of high end tourist destinations and amenities with increase in the number of attractions. The government has also embarked on increased overseas marketing and campaign for the various holiday destinations. As a result, the number of visitors attracted to the country has increased and this has increased the gross domestic product. Recalling that tourism is a major contributor for the country’s GDP I tend to strongly support its existence (Central Intelligence Agency 2).

Furthermore, with new festivals, exhibitions, and sporting events and more so with the reputation-building overseas acquisitions and the notable success of the emirates airline brand, the Dubai tourist potential has continued to grow with several million visitors expected in future.

Industrialization and Culture

The Dubai culture is deeply influenced by Arabic Islamic traditions. But culture is just’ opium’ since it rarely contributes to the daily individual survival needs. Whether there is decay of culture or not, I differ with retaining of culture as a weapon by any means. The women are not segregated nor discriminated where they are allowed to drive and this offers the charming warm friendliness by the society (Davidson 67).

Industrialization has helped in shaping the conflicting gender dominance that is prevalent in many Muslim states and various nationalities in Dubai, irrespective of the religion perfectly works side by side without any conflicts. Despite being a male dominated society, female are offered leadership positions and they have dominance powers in the family including the extended family. Retaining culture in order to die of poverty is blackmail, though, to help in promotion of cultures the country has embarked on cultural and sporting events which are representative of the very traditions.

Industrialization and Politics

Even though the country has a hierarchical government system, the manner of ruling is diversified and the one man regulation of the market place is not extremely practiced. There is the close collaboration between the business world and this installs confidence in the investment in the country and the resulting economic growth. The diversification of power was brought along by industrialization as opposed to the many countries that depends on oil (Explorer publishing 2).

Urbanization

Urbanization enables the country to produce goods in a fast and efficient way due to the availability of facilities and technology that enhance production, the products become cheaper and affordable to the majority, life expectancy increases due to improved health services and also education and participation in leadership and government becomes available to many people. In a nut shell, industrialization “gives birth to urbanization and thus leads to overall development in the respective country. Though initially urbanization led to formation of slums, poor sanitation and poor working conditions, remedies were made as unions were formed to protect workers, sanitation improved greatly and a minimum wage was created so that people would afford a better living hence reducing the slums-since slums are usually associated with abject poverty and low living standards and lifestyle (Masdar 4).

The negative impacts of Dubai rapid industrialization

Due to the rapid expansion of industrialization, there are a number of problems that come in hand. But in comparison to the number of the positive impacts, the negatives are heavily outweighed. However, for every act, there is always an opposite negative force and the use of analytical and systematic procedures helps to reduce them (Anand 137). These among others include; the violation of human and labour rights; increased pollution of the environment; loss of culture, language and the neighbourhood and the uncertainty of the future economy.

The environmental issues and the ecosystem

Though the government is adhering to the various international acts on biodiversity, endangering of species, the hazardous wastes, the marine dumping and the protection of the ozone layer, industrialization might be hazardous to the future of the ecosystem. The enforcement of laws regarding the conservation of the environment including the conservation of the coasts from further development prior to the government notice is making desirable and optimum efforts (Samir 1).

But surely, pollution is happening everywhere globally, what is different is just the quantities. Of late pollution has been a disaster to the whole world. The more a country is industrialized the more likely its environment will be affected. In the recent past studies have indicated that there are temporal damages to the ozone layer thus exposing harmful rays and by so doing harming the living organisms on the planet earth (CBS Interactive Business Network 1). The fully industrialized nations are believed to be the largest emitters of these toxic and harmful components into the atmosphere. Too much focus on environment would incapacitate the living generation and immensely affect the future in the ‘purpose’ of sustainability.

In the cultural and religion, the rapid economic development has led to the changes in the lives of different people. The multinational cultures have slowly led to the decay of the mother cultures of the society. However, the country’s rulers are committed to the safe guarding of their heritage against erosion that have been caused by the speed of development and the increased access to the outside cultures and material goods (Samir 1). In addition, generations need to move with the evolution and advancement. We cannot relate the modern generation with the fifteenth century era and thus we need to move forward irrespective of culture loss.

Some may argue that very rapid capitalism and economic growth without sufficient regulation makes the economy sterile and this kind of economy can easily collapse where they categorize Dubai also.

But there is the expeditious control of the markets to effectively regulate and maintain the long term sustainability and reduce the wastage of human labour. This increased growth will lead to the motivation of the markets but the monetary policies works effectively to control this (Explorer publishing 5).

The increased immigration has been accused with the decay of human rights with the blackmail in the media. This is more of the propagandas by the already established world to help tarnish the image of the country and reduce competition. There have been no culprits who confess of the torture as accused (The Doha Debates, 2009). The competition over the long term sustainability and the regional rivalry in the oil focused emirate led the Dubai planners to pursue in the industrial sector. This would help in pursuing such externally oriented strategies that would help in placing the country’s economy at reduced risk from the dependent circumstances.

Also, the country had a narrowed economy base which would have eventually exposed the country into the threats of unemployment due to the reduced job opportunities. Industrialization led to the increased job opportunities and employment for both the nationals and the multi nationals. This has led to the economic growth and expansion in the various sectors of the government. This is more so in the tourism industry and the commercial sector where the country has become the economy hub in the emirates region (The Doha Debates, 2009).

Nevertheless, the development in industrialization also leads to the decay of various sectors in the society. These negative traits have to work hand in hand with the positives for any healthy economy. As a result, there is no need for the focus on the minority side effects whereas the positivity is immense.

Policy change due to industrialization

Before industrialization process in the United Arab Emirates, the main economic activities were agriculture, fishing, pearl production, and also herding. The oil exportation then brought about high economic growth and development. Industrialization has however led to diversification of the economy and the dependence on oil has declined. This has brought the need to form liberal and market oriented strategies (e.g. Free Trade Zones) requiring nil taxes hence drawing massive foreign investment. Industrialization in Dubai mainly concentrates on the transport industry, tourism, among others. Dubai is a leading country in the UAE in terms of growth due to its transition from a de- industrialized oil economy to an industrialized expression economy; this makes it to be viewed as an oasis of modernity and prosperity (CBS Interactive Business Network, 2008).

The Free Trade Zone rule entails that one or more nations have quotas and tariffs done away with and bureaucratic obligations lessened so as to magnetize firms by raising the inducements for conducting business there. The primary goals of the free trade zone course of action are to boost foreign exchange revenues, build up export-oriented industries and create employment openings translating into the general economic growth and development. The free trade zone idea is an aspect of the government to provide various incentives to foreign investment in the service sector, this help them enjoy the no-taxation policy of the government. The UAE’s (trade) policy has been steady with its commitments. The government takes a decision-making role in legislation, which manage the operation of the different financial sectors devoid of posing any harm to the trade activities. This is aimed at maintaining the checks and balance and the government plays a role to ensure that all the required conditions are observed and maintained at all times without fail whatever the circumstances may be.

The industrialization had also some negative impacts one of them being financial crisis due to inflation and deterioration of Dubai-related credit. The UAE‘s bond markets were also weak. The government however intervened in terms of giving financial stimulus to help curb the situation. Authorities are also introducing measures to facilitate development of bond markets for local companies and banks as a way to reduce the effects of the financial crisis (Seznec and Kirk 75).

Conclusion

The literature review of the rapid industrialization of the Dubai has shown that industrialization is complex and overwhelming process in terms of its implications. There are both positive and negative implications of rapid Industrialization to a country, and for her to obtain optimum benefits of rapid industrialization. Therefore she must employ analytical and systemic procedures (Human Rights Watch 2). Although industrialization has both positive and negative effects to the economy, the positive effects surpass the negative ones with a great margin and it is therefore taken as a positive impact to the economy. It is also easy to curb the negative impacts through formulation of policies and strategies. The fully industrialized countries are usually a mile ahead in terms of development as compared to the less industrialized or unindustrialized nations. As a result of that they tend to become powerful in various sectors of the economy while those that are not industrialized become dependent. This is because industrialization is usually associated with innovation and creativity coupled with financial capability.

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