Dubai is a good lesson on what to offer the world when you’ve got nothing to offer…
So I’m on the road again. It’s a mix of business and pleasure, but I’ll get to that later.
Right now, I’m writing this to you from the comfy lounges of Dubai’s international airport. I’m trying to keep a low profile. A couple of years ago a man was deported from Saudi Arabia for being too sexy. Apparently that sort of thing doesn’t go down so well over here.
This is his picture.
You’ve got to admit there’s a striking resemblance. So I’m keeping my head down and my nose clean.
I’ve just had three days here in Dubai. That’s a quick tour of duty, but it’s enough to leave your jaw on the floor. This city is incredible. It’s really like nowhere else on earth.
The first thing that strikes you is the immense wealth on display. It’s next level. From massive sky-scrapers to man-made islands.
But it doesn’t stop there. It goes all the way to ridiculous town.
For example the Dubai police fleet includes Lamborghinis, Ferraris, and even Bentleys.
Though its not all that clear who they’re chasing. Dubai is ranked as the 5th safest city in the world – and you get the sense wandering around that you don’t want to find yourself on the wrong side of the law here.
The locals also have a deep love of gold. One in five purchase gold each year. 40% of physical gold traded in 2013 occurred in Dubai. I read a stat that said the combined weight of annual gold traded amounted to more than 354 elephants! I don’t know when elephants became the standard measure of the gold trade, but there you go.
There are even vending machines that dispense gold bars.
(Did I mention how little crime there is?)
Dubai Mall is the largest shopping centre in the world, and DubaiLand, when it opens, will be the largest theme park in the world – twice the size of DisneyWorld in Florida. It seems they just can’t resist the allure of all those white-elephants. Earlier this year a state-owned firm announced plans to build the world’s largest Ferris wheel, on – you guessed it – another artificial island.
Seriously, it’s nuts. So much money. So much gold-plating (literally) of ridiculous things. How do they pay for it all? Dubai government bonds are unrated and there’s no data on how much public debt Dubai actually has…
But what’s really strange is when you try and get under the hood of the economy and figure out where all this money is coming from.
My first thought was of course its oil. But then I found out that Dubai ran out of oil years ago, and oil trade only accounts for 6% of GDP.
That’s not enough to build golden palaces with.
The key to Dubai’s success is that it has successfully positioned itself as a pivot point for massive amounts of global trade.
Dubai is now a regional and global hub. A massive 70m passengers used Dubai airport – more than any other airport in the world. But hold on to your hats because the airport is expanding to a capacity of 200m!!
The port at Jebel Ali is hands down the busiest in the Middle East, and it’s on track to be the biggest container port in the world by 2030.
This hasn’t been an accident. Local officials saw the writing on the wall as the oil reserves ran out, and made trade a focus. It has 22 “free zones” – where international companies can operate with little regulation and minimal taxes. The free-zones are based around particular industries. The financial free zone even has it’s own judicial system.
There are also no income taxes here. Though that doesn’t mean that it’s a capitalist utopia. There are many state-owned enterprises, and there is a keen focus on job creation. (Someone told me that you can get a job at a construction site as a ‘red cone’ if you can’t find anything else!)
And there’s a certain social cohesion that drives things along. They managed to build an above ground train network, consisting of 42 stations, in less than 18 months! How’s that for efficiency?
The other weird thing about Dubai is the population. Locals account for only 15% of the population, and almost none of them work. They seem to live like landed gentry. Bangladeshis and Indians seem to be doing the manual labour, while Chinese, Europeans and Americans are running the rest of the show.
(There’s a legend of foreigners just dumping their cars at the airport as everyone left during the 2009 financial crisis.)
So Dubai is a ‘merchant’ city. That is, it doesn’t produce anything. Rather, it just facilitates a whole lot of economic activity. And the rewards from that role, it seems, are lucrative.
As we transition from the mining boom and the world turns its back on coal, there might be a lesson here for Australia…
Anyway, I’m on the road. I’ve developed the Knowledge Source model into something I think I can take to the world. So it’s a bit of a road show. But don’t worry. I’ll still find time to duck back to Greece for some quality RnR.
Next time you here from me, it’ll be from there.
Been to Dubai? What did you make of it?