Analysing The Economic Profile Of Dubai Economics Essay Example

free zones throughout the country which will greatly strengthen the finance and information sectors if successful within the defined time period.Dubai, under the leadership of Mohammed bin Rashid Al Maktoum, has been ruled by the Al Maktoum dynasty since 1833. Mohammed bin Rashid Al Maktoum holds the positions of both Prime Minister and Vice-President of UAE. The government operates within a constitutional monarchy model.

In addition to hosting high-level sports events that attract participants from around the world, Dubai is renowned for its mega construction projects. The government aims to further develop the construction sector in order to diversify its economy. This sector is known for its fast pace compared to Western countries, largely due to employing low-paid workers from Asia who work long hours.

While heavily reliant on oil revenues, Dubai's economy seeks expansion in its commercial and corporate sectors as part of a broader strategy to reduce dependence on oil reserves. To achieve this goal, Dubai focuses on creating appealing shopping malls, parks, hotels, restaurants, and resorts that attract more tourists. Failure to develop these other sectors could lead to a serious crisis for the country.

Since 2007,Dubai International Airport has become not only the busiest airport in the Middle East but also one of the fastest-growing globally. It consistently experiences an increase in passenger numbers and was estimated to have served approximately 30 million individuals by the end of 2010.The airport has significant investment plans with a target passenger capacity reaching 45 million by 2018.

Dubai's climate is characterized as sub-tropical with mild winters and scorching summers.Rainfall occurs infrequently resulting in prolonged waits for precipitation.Throughout most of the year, Dubai experiences hot weather, with summers reaching

temperatures up to 40°C and nighttime lows around 30°C. In this course, we will provide plausible scenarios for future development in Dubai based on effective scenario planning guidelines. These scenarios will take into account various factors such as the impact of global recession on economies worldwide, including Dubai itself. Additionally, we will consider changing patterns of solar energy consumption over time, shifts in investing tendencies towards different sectors or avenues, and the growth of Muslim financial banks.

While Dubai was less affected by the recession compared to other countries, it still faces severe consequences when foreign investors in western countries encounter difficulties. The uncertainty surrounding potential profits has led many foreign investors to halt their investments, causing hesitation among both short-term and long-term investors and increasing international market uncertainty. Furthermore, Dubai's economic system is struggling due to problems caused by the global financial crisis. This has resulted in a shortage of liquidity and significant impacts on the private investment sector. All sectors in the country are facing challenges as a result of the worldwide recession and financial crisis (Martin, 2009).The current crisis has heavily affected the tourism and property sectors in Dubai, which are major contributors to the state's revenue. The construction industry has also faced obstacles due to limited foreign investments. This has resulted in a decline in property-related revenue as foreign investment in private properties and state development programs reduces. Additionally, there has been a decrease in tourist arrivals as people hesitate to travel abroad during unfavorable economic conditions in their own countries.

An article from October 2009 published in the Wall Street Journal emphasized how Dubai's economy has been greatly impacted by the global

financial crisis. Unlike its wealthier neighbor Abu Dhabi, Dubai heavily relies on real estate and experienced a 50% decline in prices within one year. The emirate is facing a significant financial crisis with $50 billion of debt due within the next three years, and total debts estimated to exceed $80 billion.

To address this issue, the government is injecting money into the economy to alleviate the impact of the global recession and mitigate job losses caused by fiscal challenges. However, given that multiple sectors have been affected by the recession, it remains uncertain if this injection will fully revive their economy.

Recognizing that fossil fuels are not sustainable for long-term use, Dubai has turned towards solar energy as an alternative solution.Dubai, with its 300 sunny days per year, makes harnessing solar power relatively easy. Not only does solar energy cost less than fossil fuels, but it also stimulates economic growth and reduces overall energy expenses - a crucial advantage during times of global financial crisis. Dubai is at the forefront of effectively utilizing solar energy, which further decreases energy expenses for the country. Renewable energy, specifically solar power, is widely recognized as the cleanest and most preferable alternative source of energy. Its implementation in telecommunications has expanded coverage in remote desert areas and resulted in an annual reduction of over 260 tons of carbon dioxide emissions. The success of using solar energy across various sectors like tourism and infrastructure has attracted foreign investors who view it as a profitable long-term investment. Consequently, this has improved the country's tourism industry and is expected to drive increased foreign investment. Currently, solar energy is being utilized in hotels where fully

solar-powered heating systems have been implemented, as well as in cars and parking meters. While transitioning from oil to gas posed challenges, adopting solar energy has proven easier for people. Ongoing scientific research aims to enhance the efficiency of harnessing solar energy even further by establishing a dedicated university focused on renewable energy development within the state.In 2050, it is projected that renewable sources will meet half of the UAE's energy demands. Dubai has been at the forefront of sustainable building practices since 2008 and aims to continue incorporating green techniques into new development projects. As part of this initiative, Dubai plans to construct the largest solar energy plant, set to begin operation in late 2010 (Maurice., 2009). According to Green (2008), this facility will produce photovoltaic panels capable of generating an annual power output of 130 megawatts. The efficient utilization of solar energy has played a significant role in the country's economic growth, as noted by Meena (2009).

To address the depletion of its major petroleum reserves by the end of 2010, Dubai has diversified its investments into tourism and construction sectors. Notable projects include shopping malls, parks, five-star and seven-star hotels, as well as the world's tallest building. These developments have attracted foreign investors who see potential opportunities for investment (RTE, 2010). Currently, efforts are being made to further enhance the construction sector in order to increase tourist attraction and generate additional revenue for the economy. Foreign investors are making substantial investments with hopes that these sectors will elevate the country's economic status and aid post-global recession recovery; however, it is predicted that these sectors may take some time to fully mature.Dubai has transitioned

from a western banking system to an Islamic financial banking system due to its status as a Muslim country. The overall banking in Dubai is now based on the Islamic system, which aims to provide justice and prevent unfair activities. While there used to be western banks in the country, solid reasons have led to a shift towards the Islamic banking system. Dubai is home to prominent Islamic banks such as Dubai Islamic Bank (DIB), Dubai Bank, Emirates Islamic Bank (EIB), and Noor Islamic Bank (NIB), which have had a significant impact on the industry.
Islamic banking offers advantages for both Muslim and non-Muslim clients while promoting a culture aligned with Islamic teachings. This system prioritizes ethical treatment of customers regardless of their religious background, leading to a change in the overall business practices culture in the country. Previously focused solely on profit generation, businesses are now encouraged to consider ethics alongside profitability. This approach has instilled confidence among investors and attracted foreign investments, contributing to Dubai's economic growth.
To further develop its Islamic banking system, Dubai plans to establish an academy dedicated exclusively to teaching Islamic finance – a first in the region.Through this institution, individuals can pursue bachelor's, master's, and doctorate degrees in Islamic finance. The establishment of this academy showcases Dubai's commitment to improving its financial sector by providing education to professionals before they enter the industry. It is important to note that all investments and transactions in Dubai are conducted through its Islamic banking system, both domestically and internationally. This unique banking system has attracted attention from Western countries, leading them to adopt ethical practices in their own systems. When considering potential

scenarios that could impact Dubai's future or the region as a whole, several factors stand out, including global recession, solar energy consumption, changes in investment trends, and the presence of Islamic financial banks. While each scenario individually affects the economy, they are interconnected when evaluating Dubai's economic landscape. In relation to addressing the global recession and its effects on Dubai's economy... The global recession has caused foreign investors to become more hesitant when making significant investments, creating obstacles for attracting investments into the economy. However, Abu Dhabi expresses interest in investing in Dubai with hopes of boosting the country's economy. If allowed by Dubai authorities, there is a possibility that Abu Dhabi could eventually dominate over Dubai due to it already being the largest and wealthiest province in the region.Dubai is accepting aid from Abu Dhabi to create long-term job opportunities. The government plans to inject cash into the economy, but there is a risk of future inflation if too much money is injected. Despite this, stabilizing and stimulating economic growth is seen as beneficial. Dubai has been leading in solar energy consumption, reducing reliance on fossil fuels and costs associated with them. Efforts are being made to improve the renewable energy sector through the establishment of a dedicated university and large-scale programs. These efforts will have a positive impact on the economy. Due to expected depletion of oil reserves by 2010, the government has shifted investment towards construction and tourism for maximum profits. However, limited foreign investment and the effects of credit crunch during the global recession have posed challenges, resulting in a shortage of liquid cash and slower development in these sectors impacting

overall economy.
Dubai has experienced an Islamic financial boom as it transitioned its banking system to Islamic banking. This shift has resulted in the country conducting its finances through Islamic Banks, which prioritize fairness and ethical treatment for all customers regardless of their religion or belief. While there may be potential conflicts and societal tension for non-Muslims using these banks, it remains uncertain if plans will be made to address these situations.

The increased use of solar energy is expected to have a positive impact on the economy. This is evident from the fact that solar energy has already helped reduce fossil fuel costs due to its lower price. Additionally, if future plans for a significant renewable energy initiative are implemented, it will further encourage the adoption of solar energy.

Considering these four situations and their influence on economic progress, it can be concluded that they all contribute to establishing a strong and stable economy. However, continuous efforts are still necessary to improve the country's economic circumstances.