Development in the UAE

In North America, we tend to have an underlying mentality that democracy is best governing system and that although other countries are also industrialized; everyone wants to be North American in order to gain what we have. I have to say that this ethnocentric impression needs to be reconsidered. I form this opinion after meeting with a number of business people in the UAE, particularly with Mubadala, a development organization. I am really fascinated with the organization because it is a private organization that is executing public initiatives. It is an interesting solution for bureaucratic issues that we face in many industrialized countries that inhibits quick development - especially considering how fast the UAE's governments' decisions are being realized. The evidence of this development is obvious in the fact that the majority of the organizations we visited are in a new building of less than 2 years and there are thousands of cranes operating every day. I have never seen growth like this before - and I was living in Alberta during the recent oil boom.

Mubadala is private in that it is managed as any other organization that effectively manages its cash flows and does proper financial analysis for each project, diversifying industries and expanding operations. What makes Mubadala an interesting case is that it is mandated by the government to execute their development plans - for the economic and social well-being of the region. The UAE is governed by autocratic rulers who make all the major decisions of the country, so they have a strong influence in the strategic direction of this company. They also act as a venture capitalist, investing in various projects that Mubadala suggests are worth pursuing, that also support the strategy of the UAE. The oil money Mubadala does not appear to fuel an artificial stimulation of the economy (which we did see with other sectors such as in the Media City of Abu Dhabi), but just provides available capital. Additionally, because of this close relationship between Mubadala and the government, the company makes decisions based on social and economic parameters, perhaps encouraging more long term and sustainable decisions. For example, a major strategy of the government is to build the capabilities of Emiratees through the partnership with multi-national organizations. Thus the decisions made by Mubadala in their partnerships will encourage this knowledge transfer to locals, fulfilling a social purpose while stimulating economic activity. This has the potential to lead to sustainable growth with lesser and lesser reliance on foreign knowledge and investments.

This system is not without flaws by any means, but I think that it is interesting to see how effective it seems to be. Especially when comparing development to Abu Dhabi's neighbour, Dubai. Dubai has executed its development in a much more capitalistic fashion. This has facilitated its growth to some extent, but the city and industrial planning seems to less strategically aligned and purposeful as the development we observed in Abu Dhabi. Their development was delegated to various companies with less direction as to what to develop and how - there is not just one development organization like Mubadala. Thus there are several 'city centers' and suburbs developed that have poorly planned connecting streets making transportation a challenging issue. This comparison of development definitely favours Abu Dhabi's approach for long term effectiveness.

I have a number of criticisms of this system, involving many more complex issues than I have covered in this reflection. I will just share a few brief thoughts: Firstly, this rapid, autocratically directed growth is likely effective as a result of its focus on the well being of a city, not addressing the needs of the countryside of the small region. This is a considerably different situation than what is found in Canada or other larger countries. Secondly, the social development I spoke about is directed towards the Emiratee locals who make up about 10-15% of the country's population, who already have access to a number of advantages than the rest of the population. The social conditions of the remaining 85% of the population of the country seem to be largely unaddressed. Lastly, although Abu Dhabi is responsibly using their oil money to diversify their economy for long term success, I have doubts as to the economic viability of some of those investments (such as Masdar or the Media City), as they are attempting to create demand or industry from scratch, with the attitude that "if we build it, they will come." But will "they" actually come? Only time will tell. As for now, no one really knows, it is all speculation.