Dubai
diversification
Since 2000, the Dubai economy has grown at a compounded annual growth rate of 13%. Despite this success, Dubai has recognised the danger that oil price fluctuations represent to the emirate’s economic stability. Already, there has been a massive effort to diversify the economy away from oil – Dubai’s
booming tourist industry is testament enough to that.
This diversification process is going to be strengthened. Last year, the government established a new Strategic Plan (2015) to further diversify the Dubai economy into non-oil sectors. The hope is that this will bring with it a range of economic benefits, including an increase in real GDP per capita from $37,000 to $44,000 by 2015. The plan concentrates on the areas of tourism, transportation, construction, real estate and professional services. These sectors will be improved through the growth enablers of increased productivity; investment in human capital, science and technology; and the provision of a flexible legal and regulatory framework. This will require around 882,000 extra workers in Dubai, including a hefty increase in highly skilled labour from nationals of the United Arab Emirates (UAE). The economic proposals will be conducted “in line with international environmental standards”, and will maintain the unique culture of the Dubai people.
Dubai’s diversification strategy provides an exemplar for their neighbours. It’s estimated that its success so far has already inspired the UAE as a whole to invest around $1trillion in infrastructure and real estate. Abu Dhabi – whose non-oil sector’s GDP share is 3 times less than Dubai – launched its own five year economic plan this May, which seeks “to diversify the economic base of the emirate by reducing dependency on oil and increasing the share of non-oil sectors.” Economic diversification is a central means of ensuring economic stability in the entire UAE region. Stability breeds confidence, which will encourage investment from abroad, and protect Dubai from the threat of any global economic downturn. Dubai has led the way in this fight against oil price dependency, and rest of the region is following. Log onto: www.spectator.co.uk/the-magazine/dubai for a chance to win a luxury holiday in Dubai.
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