Dubai Crisis to Sustained Growth

By: Submissions

Dr. Raju M. Mathew writes: Dubai A Victim - Dubai is a victim of over-projection at the time of boom and underestimation at the time of bust or crisis. Builders, investors, sellers and buyers in Dubai behave irrationally without having a clear cut idea or knowledge about the actual strength and weakness of Dubai. Misinformation and semi-processed data were the basis of all the speculation in Dubai. In Dubai fantasy prevails over reality. The real economy of Dubai is far away from the over projection and under estimation made by the market players as well as its friends and enemies.

New Paradigm of Development

Dubai is youthful and ambitious without any limit. It has big dreams, striving for building up new paradigm of development. Dubai is unique quite different from all other metros and big cities of the world. The last twenty years of development of Dubai is far greater than fifty years of development of Hong Kong or two hundred years of development of the other world centers of trade or business.

"Two steps forward and one step backward" is a common strategy followed by almost all countries or parties engaged in war. On the other hand, Dubai followed the strategy of "twenty steps forward and five steps backward" for development in which Dubai is of course a gainer and not a looser.

Methodological Problems

However, the basic methodological problem for Dubai is that it is not mature enough to afford the pains of such a big growth that too with a very short span of time. The rulers and other champions of growth of Dubai have become victims of such a growth for which they don't have the correct measure to scale its dimensions and social impacts. As a result everybody in Dubai, from cleaner to ruler, suffers from too much stress and tensions.

Globalization – Sweet and Bitter

Dubai achieved all its development without the backing of oil money or industrial or agricultural developments. Dubai has been tuning itself to take advantage of globalization by assuming the role of world's business centre catering the dreams and aspirations of the youthful investors, workforce, businessmen entrepreneurs and professionals on a global basis. Dubai offers unlimited opportunities and challenges for them also. So they will come to Dubai at least for the next twenty five years. The economy of Dubai is basically service sector–oriented depending upon the international flow of capital, technology, expertise and work force. However, Dubai realizes that there are bitter fruits too in the basket of globalization. But Dubai has no other alternative.

The Actual Strength

Dubai has been developing its knowledge sector or at least the basic infrastructure for the knowledge economy and building up its strategic human resources thanks to the vision and determination of its rulers and their team of young planners and executives working round the clock almost every day. Further. Dubai has been maintaining very healthy relationships with the other emirates, especially Abu Dhabi which acted as a real friend in deed and a great leverage and moral booster. The assets of Dubai have far exceeded its liabilities in terms of several hundreds. Dubai is about ready to harvest the fruits of its physical and social infrastructural development.

Lessons of the Crisis

Every crisis brings forth stability and stimulus for further advancements in the long run. Crisis is the time for learning and doing home work for the bold and the clever. The timid and the chicken hearted men will be withered in a major crisis, after blaming others and cursing themselves. Dubai has proved that its leadership is bold and clever.

Stock markets are not the clear indication of the soundness of an economy, especially of Dubai, as in most cases they are over-sensitive upon rumors and speculation rather than clear cut ideas, visions and knowledge. The major players of stock markets quite often overestimate or underestimate either the strength or weakness of an economy without much basis. It can be seen that every boom is the outcome of over-estimation as every bust is the result of underestimation. Further every boom breeds further and further over projection as every bust begets further and further under-projection.

It is high time for Dubai to set up a Advanced Centre for Research on Dubai Economy to study about the actual strength and weakness of the economy so that the rulers, market players and the general public can have access of the actual knowledge about the economy rather than depending upon the half-cooked financial or economic analysis or guess works or ill-informed projections made by financial analysts and management experts in an overnight. Dubai must be made more transparent in its financial dealings and business policies so as to minimize rumors, speculations and baseless projections. For its sustained growth, Dubai must formulate and implement certain bold steps and strategies.

Strategies for Sustained Growth of Dubai

Strategies must be formulated and implemented in consolidating the gains already achieved by Dubai and maintaining its sustained growth. It is time for Dubai to limit its growth based on debts; stop or post-pone new and ambitious development projects, including its international projects. Efforts must be made in getting the optimal returns for the investments that it has made so as to make easy and prompt repayments of debts without affecting the growth of the economy.

Strategies must be made in making Dubai globally competitive so as to attract more and more international capital and expertise. As an immediate step, Dubai must be made a less expensive city; cost of living must be made less, maintaining high quality of life. Measures must be taken in limiting the rents of offices, business establishments and residential complexes. If it is made expensive its competitive advantages will be lost. For the long term interest, the business community must be prepared to limit their profit margins, in stead of maximizing their profit. Everybody must be encouraged to depend heavily on public transportation system rather than private cars so as to minimize traffic jams or congestions. Healthy work culture must be developed to minimize stress and strain in offices, firms and streets besides medical expenses so as to maximize efficiency.

Strategies must be formulated to develop some industries in Dubai so as to cater the entire Gulf Region, especially in automobile, shipbuilding, food processing and Information Technology. Dubai has great potentialities of emerging as the world or at least the regional center for high quality and less expensive higher education. Strategies must be formulated to offer the quality higher education far better than that are offered in the western countries with one half or even one third of the cost. Besides offering science and technology education, it must offer high tech education in Humanities and Social Sciences also.

Tourism, especially Medical Tourism has unlimited growth opportunities for Dubai by establishing world class multi-specialty health care units offering cost effective health services on a global basis.

About the Author

Dr. Raju M. Mathew is an economist and a strategic thinker. He has strong backgrounds in Education, Information Technology and Knowledge Society. Now he works with Al Ain University of Science & Technology, Abu Dhabi, UAE. Besides formulating two basic theories on Knowledge in 1985, he propounded Knowmatics , a new science and engineering of Knowledge in 2005. He has contributed several works on the present global economic crisis that are available in the net. His e-mail ID: rajoocyber@yahoo.com

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