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The Emirate of Dubai, the UAE: prerequisites and stimulus of economic growth

The Emirate of Dubai, the UAE: prerequisites and stimulus of economic growthBased on the analytical and statistical reports of international organizations, it can be noted that the Emirate of Dubai is on the course of rapid economic development. According to experts, the growth of the national economy of the Emirate is based on the five different sectors that should provide annual GDP growth of 4-5%. In particular it concerns the following sectors of the national economy:

 

  • Market of financial capital;
  • International trade;
  • Local and international transport logistics;
  • Investment projects in real estate;
  • Maritime industry and fish industry.

Experts of the analytical company have already noted the growth of the authority of Dubai as the major regional and international financial centre. This situation determines the increasing investment interest and provides the constant increase in the liquidity of capital. Let’s consider some of these sectors separately, for clarity of the mechanisms, which act as the stimulus of the national economy.

Market of financial capital

Today, the United Arab Emirates firmly occupies the position of the main financial centre in the region. It is not a secret that the national economy is based on the income which is yielded from oil and gas sector.

The Dubai government realizes that the oil and gas business cannot serve as the long basis for strong and healthy economy, so all the funds received from oil and gas exports, are used and invested into the development of the other industries. Perfect conditions for carrying on business, including favourable tax regime and customs privileges were created as an incentive of attracting direct investments from abroad. Moreover, relatively recently foreigners were allowed to acquire immovable property and land lots into private ownership for investment construction.

The Dubai International Financial Centre is rightly considered the financial heart of the Emirate. It is the specialized territory, which was formed in the beginning of 2004, and assigned a special economic status. In fact, it is a modern stock platform which operates in certain sectors, in particular:

  • Banking services (private and corporate banks, investments into the banking sector);
  • Stock platform (trade in various commodity groups, securities and debt obligations);
  • Registration and administration of the funds and also management of the assets;
  • Insurance activities, etc.

Maritime industry and fish industry

The annual rate of growth in this economic sector is about 9-10%. The modern megalopolis Dubai is developing not only as a major international tourist center, but also as an efficient transport hub at the intersection of trade routes of the world.

According to experts, the infrastructure and production facilities of maritime traffic in the UAE develop actively and increase every year. It should be noted that the port area of the Dubai megalopolis is opened for the various shipping operations and is an integral part of the project of developing national economy. Besides, the region's largest system of the shipping docks, which allows to carry out repairing works of any complexity, is operating here.

The government plans to transform the Emirate into the international center of the yachting industry with modern port facilities and accompanying infrastructure. Today Dubai is ready to take mega yachts which use the port area as an auxiliary platform. Experts note that the maritime industry is actively developing in the Middle East and Dubai is located in the very center.

Immovable property and long term investment projects

A significant development of this sector and increase of the supply of housing units on the local real estate market is observed during the period of 2011-2015. The annual sectoral growth exceeds 10%. It is not a secret that the real estate sector plays an important role in strengthening the fame and reputation of the Emirate on the international arena. The construction of the unique and large-scale projects has transformed the Emirate into a popular international centre for work, rest and investment activities.

The following key factors have a positive impact on this sector:

  • Decrease in cost of the immovable property and rental rates;
  • Changes in the tactics and strategy of the developers (flexible payment plans, price policy and etc.);
  • Increasing of the investment interest in the field of hotel real estate.

Cumulative change of these factors allows the market to achieve an optimum level of stability and eliminates the possibility of overheating of the market in the long-term outlook.

Local and international transport logistics

An international Dubai air harbor, which has already captured the palm of supremacy of London Heathrow Airport, is one of the clearest examples of the successful implementation of sectoral development. The annual growth in this sector of the national economy shows the average mark of 6-7%. It is not a secret that the long-term plans and prospects of development of the Emirate include the development of Dubai as an international centre of transport logistics.

It is namely the Government of the Emirate who acts as a major player, which provides the creation of infrastructure in this sector. In addition, the competitiveness in the international arena is supported by specialized economic zones. Zones with special economic status are territorial units which are designed for handling both freight and passenger traffic.

The following factors can be singled out among the main factors which have impact on the segmental success in the industry:

  • High quality of the carried out operations;
  • Strategically advantageous location;
  • Reduction of time of transport operations and delays on the line;
  • Location of transport routes in the territories with high efficiency of passenger and freight transportation;
  • Industry support of the state and political stability.

Conclusion:

In recent years, the Government of the Emirate takes active and effective measures to support industry directions in the national economy, which is reflected in the growing indices. Owing to the competent policy and defining the really important economic priorities, each subject of private business has an opportunity to develop and to improve his own business with the help of the state. While promoting the infrastructure of the Emirate up to the qualitatively new level, the authorities draw interest of the potential investors and business from around the world.

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