When someone mentions the name “Dubai” in conversation, it’s often in the context of its impressive international airport, big business, famous people, luxurious hotels, exotic cars, and fabulous shopping centers. And there’s good reason – Dubai is one of the richest, most glamorous cities in the world and part of the United Arab Emirates, which is the third wealthiest country globally.
Dubai haven’t been so rich for long, and it hasn’t happened by accident. There has been a deliberate and well-thought-out plan to ensure that the city becomes a global force, and the leaders of this dynamic emirate have carried out that plan meticulously.
Before looking at the reasons for Dubai’s and its impressive wealth, we hope you’ll find it interesting and informative to look at the back story, the history of Dubai, the foundation of its economy, and why it’s succeeded in becoming richer than other major cities in the region and beyond.
The Very Different Early Days Of Dubai
Dubai’s origins are very humble. In 1833, eight hundred men, women, and children of the Bani Yas nomadic tribe settled at the mouth of a creek. With abundant natural resources, they flourished, and a hundred years later the settlement had become a well-known fishing port, with a population of twenty thousand.
Pearl-diving, a lucrative local industry until the Great Depression, and the port, the gateway to and from the Persian Gulf, brought considerable wealth. However, in the 1950’s, the creek began to collapse, endangering Dubai’s prosperity. Sheikh Rasheed bin Saeed Al Maktoum, a true visionary, then started the hugely expensive process of industrialization and the start of Dubai’s phenomenal growth.
The Growth Of Dubai In The ‘60’s and ‘70’s
Dubai lost thousands of its inhabitants to Abu Dhabi in the early 1960’s as oil was discovered there. However, in 1966 Dubai discovered its first oilfield, and exports began in 1969, bringing new wealth. The growth plan accelerated exponentially with the development of hospitals, schools, roads, a telecommunications network, and other infrastructure.
Dubai International Airport was built and opened in 1960 and has become the busiest airport in the world. Also developed at this time was the world’s biggest man-made harbor at Jebel Ali, and with this level of infrastructure, Dubai became a prized destination for entrepreneurs and tourists.
Importantly, with its increasing role as a leading power in the region, Dubai won its independence from Britain in 1971 and became one of the six (and now seven) members of the United Arab Emirates (known as the UAR).
Diversity in Dubai In The ‘80’s And Beyond
Dubai could not compete with its UAR partner Abu Dhabi in the oil industry. Its leaders decided to maximize the emirate’s income stream by diversifying into many other areas, resulting in income from oil accounting for only one percent of total revenue.
In 1985 Dubai created its first (and the world’s largest) free zone, the Jebel Ali Free Zone Authority, known as Jafza. It led to the formation of 30 free zones in the emirate that offer tax concessions, customs duty benefits, and the removal of restrictions for foreign owners.
Amongst the most significant free zones are Dubai Airport Freezone, the Dubai Multi Commodities Centre (DMCC), and the Dubai International Financial Centre (DIFC). The visionary innovation of free zones became a significant drawcard for global investors.
- Tourism went upmarket in a deliberate move by Dubai’s leaders to attract the wealthiest world travelers. Today Dubai boasts a host of world-class hotels, including the only reputed seven-star hotel in the world, the Burj Al Arab. The warm weather and the magnificent beaches also attract international tourists. The tourism industry is now one of the most important sources of revenue, accounting for nearly five percent of GDP.
- Real estate and the property industry are two of the most important sectors of Dubai’s economy. The city has attracted enormous investment capital through its innovative tax structure, and the development of prestige commercial buildings, office blocks, and residential complexes has created much wealth.
- Dubai’s most valuable properties include Dubai Mall, the largest shopping center in the world, and the Burj Khalifa, at present recognized as the tallest building on earth. Palm Island, including Palm Jumeirah, a unique island-style residential and commercial development, is visible from space and considered by some to be the eighth wonder of the world.
- Information technology has put Dubai at the center of global activity in this field and brought riches to the city. Dubai Internet City, opened in 2000 as a free zone, is now a major technology and communication hub, attracting international worldwide investment.
- Diamond and gold trading is a significant contributor to the wealth of Dubai, and the government has created a specific free zone for this sector as part of Dubai’s diversification plans.
- Transport, logistics, and storage are fast-growing sectors in Dubai’s economy, including passenger and cargo transport, warehousing, and freight forwarding. With an increased population, growth in manufacturing, and trade with the region and Africa growing strongly, this has become a significant wealth earner.
Innovative Marketing Has Made Dubai Rich
Dubai’s growth as the world’s leading tourist and investment destination has resulted from innovation, planning, and promotion. In 1989 the government created the Dubai Commerce and Tourism Promotion Board (DCTPB), an emirate-level government body.
It initially concentrated on promoting Dubai to the luxury tourist and business market but now is involved in policymaking, development planning, and implementing large-scale strategies to ensure Dubai’s growth. This includes the Dubai Expo, which ran for six months until March 2022 and attracted over twenty-four million visitors from one hundred and seventy-eight countries.
Are Dubai Residents Rich?
Dubai is a rich city, and with its sophisticated infrastructure and facilities, there is a good chance that if you’re willing to work, the opportunity exists to enjoy a portion of this wealth. The average per capita GDP in the emirate is approximately 59000 US dollars.
Because there is no income tax or corporate tax, many wealthy people have chosen to live in Dubai – it’s secure, the weather is excellent all year round, and the shopping is the best in the world. That’s part of the reason why a visitor to Dubai cannot help but notice the familiar sight of exotic Italian, German, and other supercars on the city’s streets, amongst all the other trappings of wealth.
As in any city, there are poor people living in Dubai. There are, though, almost no homeless people, as the government provides housing for even poorly paid laborers. Still, the standard is low, and many migrant laborers live in a state of poverty.
With the high demand for construction workers, ninety percent of Dubai’s population are expatriates, many from India, Pakistan, Bangladesh, and the Philippines. They don’t all enjoy the wealth of the city.
While not every citizen of a rich city can share in that wealth, there can be no doubt that Dubai does provide a home, a holiday destination, and a sophisticated business environment for many of the world’s high-earning entrepreneurs and corporations. It has continued to lead the world in many fields, even in the trying periods of global recession and lethal pandemics.
The reason why Dubai is rich is simple. A leader who saw the need, almost seventy years ago, to diversify an economy funded initially by natural if limited resources and a form of capitalism that, although authoritarian, encouraged and rewarded international investors for taking advantage of a tax-free, well-organized environment to grow and prosper.