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THE DUBAI MODEL: AN OUTLINE OF KEY DEVELOPMENT-PROCESS ELEMENTS IN DUBAI

Published online by Cambridge University Press:  01 August 2009

Martin Hvidt
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The developmental process as it unfolds in Dubai has hardly been analyzed by academics. Most current knowledge about the country originates from media coverage, especially from news magazines and business literature. Recently a number of social science based but historically oriented academic publications have appeared. Only one study, however, has seriously sought to place Dubai in a broader developmental framework: Sampler and Eigner's From Sand to Silicon, published in 2003. Yet, by applying the so-called strategic trajectory model to the case of Dubai, they reduce their focus to the management side. Their aim is too narrow to provide an explanation of the overall development process in Dubai.

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International Journal of Middle East Studies , Volume 41 , Issue 3 , August 2009 , pp. 397 - 418
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Copyright © Cambridge University Press 2009

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References

NOTES

Author's note: An earlier draft of this study was presented in July 2007 at the Gulf Conference at the University of Exeter, U.K., which provided me with numerous helpful comments. So, too, did five anonymous IJMES reviewers. I am also grateful to the Danish Social Science Research Council for a generous research grant, which has financed this research, and to the Gulf Research Center in Dubai for hosting me during several periods of fieldwork.

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16 Ibid.

17 Kerbo, Harold R. and Slagter, Robert, “Thailand, Japan, and the East Asian Development Model: The Asian Economic Crisis in World System Perspective,” in The East Asian Development Model: Economic Growth, Institutional Failure, and the Aftermath of the Crisis, ed. Richter, Frank-Jürgen (Houndsmills, U.K.: Macmillan Press, 2000), 119–40Google Scholar.

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20 White and Wade, “Developmental States and Markets in East Asia,” 24.

21 The two countries have formalized an exchange of ideas and procedures at the state level. There are numerous examples of Dubai adapting policies or copying initiatives that originated in Singapore. One example is the yearly shopping festival, a month combining family entertainment and shopping. Nabil Ali Alyousuf (director general of The Executive Office), interview with the author, 21 December 2006.

22 For an in-depth account of Singapore's development experience, see Huff, W. G., “What Is the Singapore Model of Economic Development?” Cambridge Journal of Economics 19 (1995): 735–59Google Scholar; Huff, W. G., The Economic Growth of Singapore: Trade and Development in the Twentieth Century (Cambridge: Cambridge University Press, 1994)CrossRefGoogle Scholar. For a comparison of the development of Singapore and Hong Kong, see Low, Linda, “A Putative East Asian Business Model,” International Journal of Social Economics 33 (2006): 512–28CrossRefGoogle Scholar; Fong, Pang Eng, “The Distinctive Features of Two City–States' Development: Hong Kong and Singapore,” in In Search of an East Asian Development Model, ed. Berger, Peter and Hsiao, Hsin-Huang Michael (New Brunswick, N.J.: Transaction Books, 1988), 220–38Google Scholar.

23 Haggard, Stephan, Pathway from the Periphery: The Politics of Growth in the Newly Industrializing Countries (Ithaca, N.Y.: Cornell University Press, 1990), 27Google Scholar.

24 Phillip Hookon Park, “A Reflection on the East Asian Development Model: Comparison of the South Korean and Taiwanese Experience,” in The East Asian Development Model, 141–68; Amsden, Asia's Next Giant, 4; Haggard, Pathway from the Periphery, 27; Gustav Papanek, “The New Asian Capitalism: An Economic Portrait,” in In Search of an East Asian Development Model, 27–80.

25 In his seminal paper, “Modern Economic Growth: Findings and Reflections” (The American Economic Review 63 [1973]: 247–58, 248ff), Simon Kuznets provides an account of structural transformation and the resulting shift from an agricultural to a service society. For a detailed overview over the structural changes normally associated with industrialization, see also Mathias, Peter, “The Industrial Revolution: Concept and Reality,” in The First Industrial Revolutions, ed. Mathias, Peter and Davis, John A. (Oxford: Basil Blackwell, 1989): 1–24Google Scholar. For a summary of the key positive effects of industrialization in relation to development, see Szirmai, The Dynamics of Socio-Economic Development, 263.

26 Haggard, Pathway from the Periphery, 27.

27 Hvidt, “Public–Private Ties,” 573.

28 Herb, Michael, All in the Family. Absolutism, Revolution, and Democracy in the Middle Eastern Monarchies (Albany, N.Y.: State University of New York Press, 1999), 15Google Scholar.

29 Clapham (1985: 47–49) quoted in Therkildsen, Ole, Working in Neopatrimonial Settings: Perceptions of Public Sector Staff in Tanzania and Uganda (København: DIIS, 2006), 6Google Scholar.

30 Hudson, Michael C., Arab Politics: The Search for Legitimacy (New Haven, Conn.: Yale University Press, 1977), 25Google Scholar; Ayubi, Nazih N., Over-stating the Arab State: Politics and Society in the Middle East (London: I. B. Tauris, 1995), 164–69Google Scholar; Davidson, The United Arab Emirates, 19, 73–77; Henry, Clement M. and Springborg, Robert, Globalization and the Politics of Economic Development in the Middle East (Cambridge: Cambridge University Press, 2001), chap. 1CrossRefGoogle Scholar.

31 Davidson, The United Arab Emirates, 35–37.

32 Ibid., chap. 2, for a detailed account of the construction of the neopatrimonial structures in the UAE. For further readings on neopatrimonialism, see Weber, Max, Economy and Society. An Outline of Interpretive Sociology, ed. Roth, Guenther and Wittich, Claus (Berkeley, Calif.: University of California Press, 1978), chap. 10Google Scholar; Davidson, “The Emirates of Abu Dhabi and Dubai”; Fox, John W., Mourtada-Sabbah, Nada, and al-Mutawa, Mohammed, “The Arab Gulf Region: Traditionalism Globalized or Globalization Traditionalized?” in Globalization and the Gulf, ed. idem (London: Routledge, 2006), 3–59Google Scholar; Hudson, Arab Politics.

33 Hvidt, “Public–Private Ties,” 562. See also Beblawi, Hazem, “The Rentier State in the Arab World,” in The Arab State, ed. Luciani, Giacomo (London: Routledge, 1990), 85–98Google Scholar; and Giacomo Luciani, “Allocation vs. Production States: A Theoretical Framework,” ibid., 65–84.

34 Dubai produces around 240,000 barrels per day (b/d) of oil and substantial quantities of gas from offshore fields, http://www.uae.gov.ae/Government/oil_gas.htm (accessed 25 March 2008). Dubai's oil production peaked in 1991 at 410,000 b/d and has been declining ever since. The country will likely exhaust its oil reserves within twenty years. Gerald Butt, “Oil and Gas in the UAE,” in The United Arab Emirates, 231–48.

35 Davidson, The United Arab Emirates, 104.

36 See, for example, Owen, Roger, State, Power and Politics in the Making of the Modern Middle East (London: Routledge, 2004), 52Google Scholar.

37 “New Pay Scales for National Employees,” Khaleej Times, 16 November 2006, http://www.khaleejtimes.com/DisplayArticleNew.asp?section=theuae&xfile=data/theuae/2006/november/theuae_november422.xml (accessed 23 November 2006).

38 This view is shared by writers within the research tradition termed “historical institutionalism.” See Hall, Peter A. and Taylor, Rosemary C. R., “Political Science and the Three New Institutionalisms,” Political Studies XLIV (1996): 936–57, 936ffCrossRefGoogle Scholar; Peters, B. Guy, Institutional Theory in Political Science: The ‘New Institutionalism’ (London: Pinter, 1999), chap. 4Google Scholar.

39 For an elaboration upon the historical, external, location/size, cultural, institutional, and political factors in forming Dubai, see Al-Abed and Hellyer, The United Arab Emirates; Davidson, The United Arab Emirates; Hvidt, “Public–Private Ties”; MENA, “The United Arab Emirates,” in Middle East and North Africa 2008, vol. 54 (London: Europa Publications, 2007), 1207–41Google Scholar; Peck, Malcolm C., The United Arab Emirates. A Venture in Unity (Boulder, Colo.: Westview Press, 1986)Google Scholar; Heard-Bey, Frauke, From Trucial States to United Arab Emirates (Dubai: Motivate Publishing, 2004)Google Scholar.

40 Hvidt, “Public–Private Ties,” 559.

41 Ibid., 565.

42 “Sheikh Mohammed Announces Dubai Strategic Plan,” 3 February 2007, http://www.sheikhmohammed.ae/vgn-ext-templating/v/index.jsp?vgnextoid=321b4b7922e44110VgnVCM1000003f140a0aRCRD&vgnextchannel=b0b24c8631cb4110VgnVCM100000b0140a0aRCRD&vgnextfmt=default&date=1170516690423&mediatype=EVENT (accessed 5 March 2008).

43 Institutions might be defined as “the formal or informal procedures, routines, norms, and conventions embedded in the organizational structure of the polity or political economy”; Hall and Taylor, “Political Science,” 938. The institutional structure in Dubai is not static and, on a more formal note, includes the federal level.

44 Abdulkhaleq Abdullah (political-science professor, United Arab Emirates University), interview with the author, Dubai, 16 November 2006. Approximately 50,000 are employed in the traditional tier, including the police force. Alyousuf, interview.

45 According to my interviews and own experience, The Executive Office is a modern administrative set-up characterized by well-paid, highly educated, and highly motivated staff.

46 In this way, Dubai has copied Singapore, gathering all development initiatives into a few holding companies in order to increase control and coordination of their activities. Huff, “Singapore Model,” 744.

47 Thirty percent of Emaar is owned by the Dubai government and 70 percent by private funds. Economist Intelligence Unit, Country Report: United Arab Emirates (2006–2007) (London: Economist Intelligence Unit, 2006), 30Google Scholar. A profile of Emaar can be found in Bhoyrul, Anil, “Tower of London,” Arabian Business 8 (2007): 32–34Google Scholar.

48 Forbes magazine (2005) listed Shaykh Mohammed as the fourth richest man in the world with a personal fortune of U.S. $14 billion even though the lines between state and personal assets are not clear. The Economist Intelligence Unit's Country Report (15–16) points out that a sizable part of this fortune stemmed from business ventures and not from oil.

49 In every interview respondents singled out fast decision making and fast implementation as key factors behind the success of Dubai.

50 Sampler and Eigner, Sand to Silicon, 24.

51 “Competing Ambitions,” Middle East Economy Digest (2007): 37–39, 37ff.

52 Sampler and Eigner, Sand to Silicon, 118.

53 Abdullah, interview.

54 Geoff Taylor (CEO, Dubai Dry Docks), interview with the author, Dubai, 21 December 2006.

55 Sampler and Eigner, Sand to Silicon, 118.

56 Angus Hindley (Gulf editor, Middle East Business Intelligence), interview with the author, Dubai, 7 December 2006.

57 Economist Intelligence Unit, Country Report, 19.

58 Dubai Strategic Plan 2007–2015 (Highlights) (Dubai: The Executive Office, 2007), 18, 23. No statistics reveal the official number of nationals and expatriates in the population. The reported size of the population in Dubai varies considerably among official sources.

59 Davis, Mike, “Fear and Money in Dubai,” New Left Review 41 (2006): 47–68Google Scholar.

60 The Dubai government has invested in a few major industrial undertakings, such as Dubai Aluminum and Dubai Cable. A relatively modest privately owned industrial sector of a lighter and smaller scale produces construction goods and inputs that would be costly or inefficient to import. Davidson, “The Emirates of Abu Dhabi and Dubai,” 39. One thousand international companies maintain industrial production in the Jebel Ali Free Zone, for instance. PowerPoint presentation by Jebel Ali Free Zone Authority, Jebel Ali, JAFZA headquarters, 17 December 2006, slides 11 and 14.

61 In a knowledge economy, the central wealth-creating activity is “productivity” and “innovation,” which represent the application of knowledge to work. Drucker, Peter F., Post-Capitalist Society (Oxford: Butterworth-Heinemann, 1993), 7Google Scholar.

62 Jean F. Rischard, “The Knowledge-Based Economy: Worldwide Trends and New Ideas,” presentation at the Dubai School of Government, 26 November 2007. Rischard, World Bank vice president for Europe, made similar points in an earlier presentation: http://lnweb18.worldbank.org/mna/mena.nsf/Attachments/K4D-Rischard/$File/J-F+Rischard+K4D.pdf (accessed 12 May 2008).

63 See the DIFC website, http://www.difc.ae/ (accessed 17 October 2007).

64 During the summer of 2007, Borse Dubai (the name of the stock exchange located in Dubai) and U.S.-based technology Nasdaq were in a bidding contest to acquire the Scandinavian Stock Exchange. “Borse Dubai has $5.3b for OMX,” Gulf News, 31 August 2007, http://archive.gulfnews.com/articles/07/08/31/10150350.html (accessed 2 September 2007). Borse Dubai has also initiated negotiations with the Karachi Stock Exchange in Pakistan. “Borse Dubai Eyes Stake in Karachi Exchange,” The Peninsula, 28 August 2007, http://thepeninsulaqatar.com/Display_news.asp?section=business_news&month=august2007&file=business_news2007082803441.xml (accessed 2 September 2007)

65 Waleed Abbas Hilmi (city planner, Dubai Municipality), interview with the author, Dubai Municipality, 17 January 2005.

66 Jose, C. L., interview with the author, Dubai, 21 December 2006; “Special Report: Banking,” Middle East Economic Digest 51 (2007): 37–67Google Scholar.

67 In regard to the issue of linkages, see Hirschman, The Strategy of Economic Development, 98ff; Thirlwall, A. P., Growth & Development: With Special Reference to Developing Economies (Houndsmills, U.K.: Palgrave Macmillan, 2006), 312ffCrossRefGoogle Scholar; and Waldner, David, State Building and Late Development (Ithaca, N.Y.: Cornell University Press, 1999), 7Google Scholar. Hirschman argues that development strategies should emphasize activities that hold the highest potential for linkages because this will provide the greatest inducement and incentive for other activities to develop.

68 Dubai Strategic Plan, 21.

69 For further information on foreign investments see, for example, Routledge, Emilie, “GCC Economic Performance in 2005,” in Gulf Year Book 2005–2006, ed. Gulf Research Center (Dubai: Gulf Research Center, 2006), 109–27Google Scholar; Economist Intelligence Unit, Country Report, 30; and Sfakianakis, John and Woertz, Eckart, “Strategic Foreign Investments of GCC Countries,” in Gulf Geo-Economics, ed. Woertz, Eckart (Dubai: Gulf Research Center, 2007), 131–46Google Scholar.

70 “DP World Plans $3.5bn Dubai Initial Share Sale,” Gulf Times, 5 October 2007, http://www.gulftimes.com/site/topics/printArticle.asp?cu_no=2&item_no=176683&version=1&template_id=48&parent_id=28 (accessed 5 October 2007).

71 Ibid. However, DP World was forced by American politicians to sell its operations in the United States, which included six ports and stevedoring operations in sixteen locations. “DP World Quits US Business,” The Saudi, 19 March 2007, http://www.grc.ae/modules/geogrphicallocations/view_articles_print.php?frm_pki=2 (accessed 30 August 2007).

72 Concerning Emaar's activities, see http://www.emaar.com/ (accessed 21 May 2008).

73 See http://www.kingabdullahcity.com/en/ (accessed 23 May 2008). See more concerning Emaar's activities at http://www.emaar.com/ (23 May 2008). See also description of various projects: “Emaar to Build $2bn Hill Town,” Middle East Economic Digest 51 (2007): 19; Economist Intelligence Unit, Country Report.

74 The airport capacity is equal to the combination of Chicago O'Hare and London Heathrow. For further information, see the Dubai World Central website, http://www.dwc.ae/ (accessed 24 May 2008).

75 See “Emirates Seeks $50bn to Expand Fleet,” Emirates Today, 24 August 2007, http://corp.gulfinthemedia.com/gulf_media/view_article_en_print.php?action=print (accessed 30 August 2007) for a review of current plans to invest U.S. $50 billion to expand the fleet so that Emirates Airlines will become the world's largest carrier. At the Dubai Airshow 2007, Emirates Airlines placed $34 billion in orders for new aircraft, mainly from Airbus. Dominic Gates, “Boeing Loses Big Order to Airbus at Air Show,” Seattle Times, 12 November 2007, 5.

76 A first-mover advantage may be defined as “a sometimes insurmountable advantage gained by the first significant company to move into a new market,” http://www.marketingterms.com (accessed 15 August 2007).

77 Wilson, Graeme, Father of Dubai. Sheikh Rashid bin Saed Al-Maktoum (Dubai: Media Prima, 1999), 126, 184Google Scholar.

78 In order to minimize risk, however, most of these megaprojects operate with a phased implementation. The second of the Palm Islands was considered for building only after the first sold out.

79 Sampler and Eigner, Sand to Silicon, 69, 161–62.

80 One example is Dubai Aerospace Enterprises, which was allocated U.S. $15 billion to establish its business in the global market. “Dubai Aerospace Eyeing Airbus Factories,” Agence France-Press, 25 August 2007, http://www.gulfinthemedia.com/index.php?id=337337&news_type=Economy&lang=en (accessed 27 August 2007).

81 Vision 2010: Dubai: Shaping the Future (Dubai: The Executive Office, 2000), 5.

82 It became legal by 14 March 2006 according to the Emirates Network account of the history of Freehold Property in the Emirates, http://realestate.theemiratesnetwork.com/articles/freehold_property.php (accessed 2 June 2008).

83 http://www.dubai-marina.com/ (accessed 25 March 2008).

84 “Dubai Issues List of Freehold Locations,” Gulf News, 30 April 2007, http://archive.gulfnews.com/articles/06/07/16/10053399.html (accessed 17 September 2007).

85 Kanna, Ahmed, “Dubai in a Jagged World,” Middle East Report 243 (2007)Google Scholarhttp://merip.org/mer/mer/243/kanna.html (accessed 25 June 2007).

86 Unfortunately, it is impossible to provide exact figures for foreign investments because FDI figures are not published for the UAE or for Dubai. Economist Intelligence Unit, Country Report, 29. For an estimate, see Wasseem Mina, “FDI Performance and the Influence of Location Factors in the GCC Countries,” Woertz, Gulf Geo-Economics, 107–29.

87 Institute of International Finance, Tracking GCC Petrodollars: How and Where They Are Being Invested around the World (Washington D.C.: Institute of International Finance, Inc., 2007)Google Scholar.

88 Greg Hunt (journalist residing in Dubai), interview with the author, Dubai, 20 December 2006.

89 Peter Folton (general manager, Dubai Grand Hyatt Hotel), interview with the author, Dubai, 19 December 2006.

90 Ahmed A. al-Tunaiji (manager, Dubai Chamber of Tourism and Commerce Marketing), interview with the author, 6 December 2006.

91 “Nakheel Designs 1km-High Tower,” Middle East Economic Digest 51 (2007): 16.

92 Klingmann, Anna, Brandscapes: Architecture in the Experience Economy (Cambridge, Mass.: MIT Press, 2007), 4Google Scholar.

93 Ibid., 2.

94 A cluster of hospitals and private clinics aim to provide high-level medical services to people from the Gulf region and Asia with the intent to promote medical tourism. See the website of Dubai Health Care City, http://www.dhcc.ae/ (accessed 13 May 2008).

95 Nabil Ali Alyousuf (director, Government Excellence Programme), interview with the author, Dubai, The Executive Office, 27 January 2005.

96 Folton, interview.

97 Amsden, Asia's Next Giant, 4.

98 This is true in general, but Dubai levies a 10 percent sales tax on hotel bills and on bank profits. Economist Intelligence Unit, Country Report United Arab Emirates, August 2006 (London: Economist Intelligence Unit, 2006), 18Google Scholar.

99 JAFZA, presentation.

100 The Excellence Programme was started in 1997 to improve government efficiency. All staff is trained in an American management model, and all departments are evaluated yearly by acclaimed assessors in compliance with this model. The program entails visits to all departments by a “mystery shopper” who rates departments' and directors' performance. Alyousuf, interview, 2005.

101 One reason for the profitability of the Dubai Water and Electricity Authority is that it has been politically acceptable to set the fees at a realistic level. Nationals are compensated for such fees through allowances in their salary, and the vast foreign population is not in a political position to resist such fees. Hindley, interview.

102 Folton, interview.

103 See n. 33.

104 Dubai Strategic Plan, 19.

105 Economist Intelligence Unit, Country Report . . . 2006, 9.

106 Taylor, interview.

107 “In recent years, much of the emirate's wealth has been generated by selling land plots to wealthy developers from neighbors such as Saudi Arabia and Kuwait.” Economist Intelligence Unit, Country Report. . . 2006, 15.

108 Hindley, interview.

109 Ibid.

110 Dubai Strategic Plan, 17.

111 See the home page of the Gulf News for an updated listing of the megaprojects in Dubai: http://archive.gulfnews.com/megaprojects/index.html (accessed 22 May 2008).

112 “Emirates Seeks $50bn to Expand Fleet”; “DP World Plans $3.5bn Dubai Initial Share Sale”; “Why Is DP World Going Public?” Middle East Economic Digest 51 (2007): 34–36.

113 Hvidt, “Public–Private Ties”; JAFZA, presentation.

114 Zeyad Almajed (assistant manager, Dubai Development and Investment Authority), interview with the author, Dubai, 25 January 2005. Numerous respondents claim that they know of government start-up firms that have actually terminated business.

115 Hindley, interview.

116 The Economist Intelligence Unit estimates that rent roughly doubled in Dubai from 2004 to 2006. Country Report. . . 2006.

117 Davidson, “The Emirates of Abu Dhabi and Dubai,” 33.

118 The successor of Shaykh Muhammed is his son Shaykh Hamdan bin Mohammed bin Rashid Al Maktoum, who was appointed crown prince of Dubai on 1 February 2008. For a discussion of family rule, see, for example, Owen, State, Power and Politics, 3.

119 Global Footprint Network, Ecological Footprint and Biocapacity, www.footprintnetwork.org (accessed 3 June 2008).

120 Democracy versus economic development is often debated. See, for example, Sørensen, Georg, Democracy, Dictatorship, and Development: Economic Development in Selected Regimes of the Third World (Houndsmills, U.K.: Macmillan Press, 1991), 164Google Scholar; Waldner, State Building and Late Development, 31ff; Szirmai, The Dynamics of Socio-Economic Development, 476ff.

121 Sampler and Eigner, Sand to Silicon.