How did Dubai get rich?
Just over 50 years ago oil was discovered here in Dubai. It helped build this modern metropolis, but the resource accounts for less than one percent of the state’s GDP. The city now a global business hub and luxury tourist destination that boats the world’s tallest building.
So how did Dubai get so rich? One of the main sources of Dubai’s wealth is from prosperous maritime activities. It was once modest fishing town, which by early twentieth century had become an important trading port. It’s location, close to both Iran and the entrance to Persian Gulf, attracted merchants from all over the region.
Today, Dubai’s main cargo port Jebel Ali is the busiest port in the Middle East and arguably the United Arab Emirates’ most valuable commercial asset. A big reason for the shipping terminal’s success is that it’s located inside the Jebel Ali Free Zone, also known as Jafza. Spread over 57 square kilometers, Jafza is the world’s largest economic free zone. It’s one of more than twenty other industry specific free zones dotted around Dubai all setup by the government.
These zones attract business with tax breaks, custom duty benefits and no foreign ownership restrictions, all within a developed infrastructure that is run by an independent authority, helping streamline bureaucracy. Within Jafza are now several thousand companies, accounting more than 20 percent of total foreign investment in the UAE. The zone employs close to 150,000 people, helping generate more than $80 billion worth of trade, which account for 21 percent of Dubai’s GDP.
It’s important to note that while Dubai is the largest and most populous state in the UAE, the richest state is Abu Dhabi, the country’s capital city. It currently holds 9 percent of the world’s proven oil reserves.
London Gateway Port, a new deep-sea container terminal, 25 miles east of the city. It’s one of the U.K.’s main links between London and 90 other cities around the world and yet it’s owned and operated by DP World, a company based in Dubai. It was 1966 when the U.K. and Dubai relationship became increasingly lucrative following the gulf state’s discovery of its first oil field. When announcing the news however, Sheikh Rashid said: The city though, wasn’t dependant on selling oil in order to thrive. Instead the oil was used to fund Sheikh Rashid’s existing strategy of basing Dubai’s economy around trade, tourism and finance.
That decision now looks like a good one as the world increases its use of renewable energy and moves away from reliance on oil. Dubai now has the world’s busiest airport for international passenger traffic, confirming its position as a gateway to the East. But it’s no longer just a stopover, it’s also become a destination for millions of visitors. The state’s vast infrastructure made this possible but many years it was largely unused. Now with an ever more globalized planet, Sheikh Rashid’s gamble of borrowing tens of billions of dollars looks to have paid off having turned this once quiet backwater into one of the world’s most powerful cities.
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