Silent Archimedes

The beauty of Dubai. Oil funding a true oasis, or is it?

Posted by silentarchimedes on August 18, 2008

The beauty of Dubai. Oil funding a true oasis, or is it?

Before the year 2000, I heard of Dubai (left, courtesy of Wikipedia) maybe once in my life. Now, every few weeks, there is some big financial news about Dubai. All of which are big in magnitude and some beyond the scope of reality. Why this sudden change in fortune in just a few years? Due to its location in the Middle East, the quickest reaction is to proclaim its wealth as a result of revenue from sky-high oil prices. However, that is not the case. Although it is true that oil provided much needed funds and backdrop when Dubai gained independence from the United Kingdom in 1971, today it only accounts for 6% of it’s US$37 billion GDP. This is an amazing statistic and it speaks strongly of how a Middle Eastern country that promotes free trade, diversity, tourism, relatively diverse media, and relative equality can be wealthy without oil revenues.


The United Arab Emirates was formed in 1971 when Dubai and five other emirates came together. In general, an emirate designates a political territory that is ruled by a dynastic Arab Monarch styled emir. The only other independent emirates in existence are Kuwait and Qatar. 1971 is of significance because that is when the United Kingdom ceased protector status of Dubai.

In 1979, the Jebel Ali Free Zone was created. It was created as a free economic zone, which offered corporations generous tax incentives to develop in the area, and allowed foreign companies unrestricted access, both in import of labor and export of capital. The Jebel Ali port (right, courtesy of Wikipedia) is now the 9th most active port in the world, in terms of container traffic. This was probably the most influential move in Dubai’s history that set the stage for present wealth. Since Dubai (and the UAE) is so small, the revenues from such an economic zone are tremendous.

The success of the Jebel Ali Free Zone has led to other free economic zones in Dubai. The Dubai Internet City houses corporations targeting emerging markets. The restrictions for foreign corporations are minimal. For example, companies may retain their 100% foreign ownership in the zone. This has led major corporations, such as Microsoft, IBM, Oracle, Sun, Cisco, Siemens, and Nokia to set up operations. However, internet restrictions do exist, such as website access to alcohol and gambling. Although they can be legally bypassed by accessing corporate VPNs in internet-free countries. Other free zones include the Dubai Media City and the Dubai Maritime City.


One simple look at  Dubai in 1990 and in 2003 shows what has changed:

Dubai in 1990

Dubai in 1990

Dubai in 2003

Dubai in 2003

The pictures above are courtesy of Essential Architecture. Look at their webpage with lots of pictures of what Dubai has become! It is utterly amazing!!

Essential Architecture of Dubai

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