Is the UAE's growth sustainable?

Locals (emirates) represent only 15% of the population and own the majority of the firms in the country. Expats represent 85% of the population and consist of occidentals who have the management jobs and of Asians/Indians/ pakistanians who work as construction workers, at the bottom of the social ladder.
Culturaly, I doupt that locals, which represent only 15% of the population, will be able to preserve the traditions and values of the country in the long run. Economically, I believe that the country will not be able to sustain its economic growth if it continues to rely on expats to provide know-how considering these expats need to leave the country when their work visa expires. Can an economy evolve if there is no corporate memory and no internally developed strength? Can a country really thrive on a comparative advantage that it purchases from abroad? I honestly do not think so. People and firms come here to take advantage of the country’s resources and tax regulations (no taxes). The economy heavily relies on expats whose life here is only temporary, which creates short sighted growth strategy. In order to grow in the long run, I feel like the country will have to be more open concerning the residency status of foreigners.
Furthermore, the government of Abu Dhabi seems to be trying to build a comparative advantage in tourism (etihad), medias (two four 24), environment (Mazdar), manufacturing and high tech (according to the Canadian ambassador). I get the impression that by trying to specialize in so many industries, they will simply spread too thin and not be able to build a consistent brand image of the emirate.

Is Dubai Authentic??

Authenticity is a key element in attracting members of the creative class to a city. In a discussion prior to our trip, we had a conversation about whether or not Dubai is authentic - does the place match its branding, does it have something unique to the city? I would argue that although Dubai does have a unique environment that will attract creative people but will not retain them. In fact, the very features that draw people to Dubai are based on the transient attitude that facilitates their departure. Because about 92% of the population is made up by expatriates (non-citizens/locals), the dynamics of the foreign portion of the population within the unique legal framework of the city defines Dubai's culture, not by the Emiratees themselves.

I would define the authentic and attractive draw of Dubai is that it is a port city and a land of opportunity. By nature a port city is a place where people will stop in for business, experience the local entertainment and then leave. Dubai is in a key location in the Middle East, and has the most liberal and capitalistic regulatory system in the whole region. It draws young people (skilled and not) to its parties and entertainment of the quality one could find in Miami or Paris. Thus it compares to other port cities that facilitate trade and entertain, encouraging repeat visits. Dubai also provides a diverse amount of opportunity, despite the recent economic downturn. Whether you are from Bangledesh looking for a better wage or are a highly sought American businessperson, there is opportunity in Dubai for you. They are drawn to the opportunity to make tax free cash in a position or field that perhaps they would be able to have in their home country. However, a large portion of the businesspeople and politicians we spoke to (who are Expatriates, members of the creative class) will only stay in Dubai for a few years. They come, get the experience they were seeking (professionally and personally) and then they are off to the next adventure.

The implications of this authentic culture on Dubai's economic development are substantial. How will Dubai retain creative people in the long run? Although there are policies in place to have Emiratees absorb this expertise, will Dubai actually become an innovation center of the world? Until Dubai solves this challenge, it will continue to be a consumer of innovation in the future despite its high population of the creative class.

Environment: Not a Priority

Prior to coming to the United Arab Emirates, I ran into my “Strategies for Sustainability” professor from last semester. Professor Graham basically said to me “Celine, you better ask them about their reckless behavior towards the environment”. I most definitely made it my mission to understand the importance of the environment within the UAE’s agenda. After having spoken to many CEOs, executives, and government officials, I have come to the conclusion that the environment is definitely not at the forefront of the majority of the business being done in this country. Abu Dhabi and Dubai want to grow. They want to grow fast. The urgency of development and the pressure of immense GDP growth, in the double digits, mean that the country does not regard the environment as a priority or even a consideration. This being said, the country does value not only economic growth but social growth as well. In a country where there are thousands of low wage workers, the UAE is striving to improve the living conditions and the quality of life of not only their Emiratis but of the variety of its expats as well. The UAE is prioritizing in this sense – the country seems to have a “double bottom line”. In a country with only a 37-year history, there is hope with respect to social issues, and once the UAE realizes the complexity of social-environmental issues, I want to be idealistic and believe that there is hope with respect to the environment as well.

The Affect of Culture on the Business Climate

There was much to see and much to do in Abu Dhabi and Dubai, but even more to learn. It's been interesting to learn about the culture and how that culture has impacted the business climate of the U.A.E.

The laws and customs have greatly affected how people do business. After a visit to the New Medical Centre that has ten hospitals in the U.A.E, we visually saw this influence. One of the hospital rooms included a large area for the family to gather and discuss the medical condition of the patient and to decide what to do. In Canada, there are patient confidentiality laws that do not allow doctors to discuss the medical condition of the patient without the proper consent, even with the family. In Canada, family members are often discourages to visit because time in the hospital is a time to rest and get better. Here, if family members don't visit it can be taken as an insult.

Over the last week, I found my opinions constantly changing as I struggled to understand the true essence of the country. I am still mulling over the issues and gathering my thoughts as I decide whether I would be willing and able to live in the U.A.E in the future.

the Grand Mosque Masdar City model

The following was originally written Tuesday the 23rd of February!


So a recap of the last few days:

After arriving Friday evening and having a quick bite to eat at our beautiful hotel, we got to bed relatively early, being exhausted from a good amount of traveling coupled with the time difference. Saturday we visited the Sheikh Zayed Grand Mosque.

(Sheikh Zayed is the late ruler of the Emirates, he established the country in 1971 and led the vision for the growth and diversification of the economy...he was uneducated, as, for example, Abu Dhabi used to be just a village of pearl divers, who stopped diving for pearls when the Japanese invented synthetic pearls...Abu Dhabi was basically settled in the 50s when fresh water was found on the island...desalination is now the second largest industry after oil). The Mosque was quite an engineering feat, with the largest carpet in the world, and it is a structure that was built in about 10 years and is enormous, though not very detailed, and used largely as a tourist attraction; it has only been open for 2 years. After that we went to the Marina Mall, and finally back to the pool for a relaxing afternoon.

Sunday was our first full day. It is also the first day of the week, as Friday is the holy day so their weekend here is Friday/Saturday. We went to SNC Lavalin, a construction company, and to the Canadian embassy, where we met the Canadian ambassador and received some very interesting insight on expats working in Abu Dhabi, along with interesting details such as the 26,000 Canadians working in the city and the fact that Australians have quite a large presence in the city. In the afternoon, we visited Masdar City, which is the first carbon-neutral, zero-waste city in the world. Largely an experiment for renewable technologies and what a fully sustainable city could look like. They are testing 41 different solar technologies, they have an institute for research which involves 88 students from 42 countries, and also a 10 megawatt solar firm, of which 3 mega watts is currently being used for the construction of the city, and the rest is currently going back to the Abu Dhabi grid. The city, when it is completed, will require 280 mega watts of power, so there are other technologies that are being developed as well for extra power; unfortunately they can't use wind as it's right next to the Abu Dhabi International Airport, and there are many other elements of the city to critique as well. For dinner, we ate at a Lebanese restaurant and met with some people working in Abu Dhabi, so were able to hear about things such as why Dubai is not by any means in serious trouble, why there has been a large shift in focus in growth to Abu Dhabi, and why fundamentalists haven't yet attacked the city, which stems from many reasons from laundering of money to a hidden drug trade.

Monday started at Etihad Airways, currently one of the largest airlines in the world which connects North America, Europe, the Middle East, Southeast Asia, and Australia like never before, creating Abu Dhabi as a hub of the world. We met with the CEO, CFO, and other executives, and had a fascinating tour of their 12-month-old facility. We also met with the Director of the National, Abu Dhabi's English language newspaper, which is only 2 years old. The rules of the media are quite different in a place controlled by a monarchy, and news is more about in-depth analysis than breaking news, as everything has to be passed through the government. Yesterday, Monday, we did several things, including a meeting with the COO of the largest public hospital in Abu Dhabi, the Sheikh Khalifa Medical Center, managed by Cleveland Clinic. Sheikh Khalifa is the current ruler of the Emirates and the eldest son of the late Sheikh Zayed. If you've kept in touch with the area, you'll know that the tallest building in the world was named the Burj Khalifa after this man. We also went to the New Medical Center, a hospital started by a Dr. Shetty, an entrepreneur who owns 26 horizontally integrated businesses and is one of 3 people in the Emirates to have been offered citizenship. Emiratis make up just 15% of the population here, and it is impossible to achieve citizenship (except for these exceptional 3). In fact, businesses cannot be majority-owned by foreigners. The Abu Dhabi government must own over 50% of any business started in the UAE. We had a chance to go to the Emirates Palace, which is quite astounding, and I finally got my first taste of beach sand.

Today we visited Studio Twofour 54 (which doesn't represent beer for you Canadians, it represents the coordinates of Abu Dhabi). We also went to Mubadala, the firm whose mandate it is to invest the government's money to deliver a financial and social return. Driving into Dubai today was quite fascinating. The development that has gone on here is capitalism on crack to say the least.Anyway, the food, the people, and the experiences have been great so far. Many details I have left out, but Im sure you get the idea of what a fabulous opportunity for our whole group.

Wild Weather

Yesterday was a day of contrasts. In the morning a couple of us went with a friend of mine to ride four wheelers in the desert. There was a bit of a sand storm. To be able to ride the four wheelers among the dunes we had to buy sunglasses because of the blowing, stinging sand.

That evening, as we gathered by the fountains by the tallest building in the world, we were astonished to see a display of lightening, followed a torrential downpour rain - something unusual in a desert!

As we walked thru the mall we witnessed an unusual sight indeed, water flooding out of some high end clothing boutiques. Clearly the Mall of the Emirates was not designed with this kind of rain in mind.

On the way back to our hotel, the driver had to navigate around large puddles, make that, small lakes of water on the highway, a new experience for him.