The Dubai Model and the New Arab World

07/22/2013 10:42 am ET | Updated Sep 16, 2013

Johann Hari's article "The Dark Side of Dubai" in The Independent in 2009, crystallized the hyperbolic writing on the Gulf emirate in the recent past:

"This is a city built from nothing in just a few wild decades on credit and ecocide, suppression and slavery. Dubai is a living metal metaphor for the neo-liberal globalised world that may be crashing -- at last -- into history."

Of course, Dubai did not crash into history and Hari was dislodged from his perch due to a plagiarism scandal a few years later. Yet, for many commentators and journalists, any mention of Dubai still evokes a sense of moralistic derision -- Dubai the land without culture filled with a people without history. For the youth of the region, however, Dubai represents something different: jobs, a relatively open society, and a government (in progress) that works. As countries in transition, like Libya, Tunisia and Egypt look to transform their own societies, Dubai is an enigmatic model in the distance.

What is the Dubai model? It is hard to fully capture the multi-faceted nature of it in just a few words, but there are several key dimensions. In addition, the unique (and transferable) aspects of the Dubai model, however, are less to do with its political system, and more about the policies pursued. In fact, too much time is spent in the region debating the political system rather than the impact of policies on the ground enacted by any ruling group or party.

Fundamentally, Dubai made itself open to people flows from around the world, with all its associated risks. This has meant that its small population -- today, 90 percent of residents are non-citizens -- has been able to build an economy depending on an externally generated labor and consumer market. In addition, to unskilled labor, Dubai has also been keen to open itself to the best talent from around the world. Take Dubai Aluminum (DUBAL) as an example, founded in 1979 and predicated on leveraging international talent and expertise. In fact, in its initial year of operation, few of the 1,386 employees were Emiratis. Yet that has changed over time, as DUBAL has grown to become the world's largest aluminum smelter. Understanding its own labor market and taking advantage of regional and international labors flows and talent has been critical to the Emirate's success.

Despite being in conservative surroundings, Dubai has also ensured that it functions as an open society, in terms of social and religious practices. While this diversity can raise tension, like last summer's #UAEdresscode campaign for example, there is an open coexistence, as can be witnessed while walking on JBR Walk, along the beachfront, with full-length niqabs side-by-side with what could well be described as the opposite of that! This openness has also contributed to Dubai becoming a global hub, and now the 7th most visited city in the world, with 10 million tourist arrivals annually. This did not occur overnight, and was linked to the gradual (and sometimes sudden) growth of the hospitality industry and expatriate population. Being an open society, however, does not just mean bottles and bars; the government has consistently emphasized gender empowerment in all fields as a matter of policy, including in key positions, political and economic.

In addition to people flows, Dubai has ensured an inflow of capital, by building a financial sector and set of institutions to leverage the capital-rich environment around it. The Dubai International Financial Centre (DIFC) has created a separate regulatory environment and court system to provide security to investors and companies alike. In addition, while still not perfect, it is relatively easy for any foreigner to set up a local free zone company, allowing him or her to deploy capital, which subsequently generates employment (albeit more for non-locals than Emiratis). The stability of Dubai and the strength of its soft and physical infrastructure has meant that in times of uncertainty, capital finds its way there; last year that included $8 billion of foreign direct investment (FDI), a 25 percent increase from 2011.

In order to spur growth and absorb investment, Dubai borrowed a page from several economic models (Singapore & Hong Kong among them) and cluster-based theories (see Michael Porter). Take a look at the growth of the aviation sector in Dubai, which in 2011, directly or indirectly contributed $12 billion towards the GDP, and accounted for 125,000 jobs (in a city of two million people). The same can be said for the logistics (e.g. Dubai Ports) and retail sectors (e.g. Majid al-Futtaim & City Centres), all of which have benefited from an ecosystem approach that has included new regulation, government-driven investment, and infrastructure development. Emirates Airlines did not become one of the world's leading airlines by accident or in isolation.

Finally, on a consistent basis, Dubai has pushed excellence in public services, culminating in the Government Summit earlier this year, which convened public servants from across the country to "exchange best practices." In Dubai, there are regular awards for government excellence given to high-performing departments. In fact if you go see the Director-General of the Dubai Courts, he will likely give you a PowerPoint presentation on their caseload, wait times, and improvements.

Lest, anyone think that everything is 'perfect' in Dubai, it is not. There are a number of issues, ranging from political prisoners in the country (due in part to a stifling intellectual/political climate) to the lack of legislative oversight to continued labor exploitation (far less than before but still problematic, given there is still no minimum wage). Societally, there are also a number of challenges, including naturalization, obesity, and a growing culture of materialism, none of which should be taken lightly. And, for the local Emirati population, there is a high rate of unemployment due to a mismatch between expectations and skills and the needs of the labor market. None of these should be under-estimated for both the moral issues they pose as well obstacles they may present to the viability of Dubai's success, as is the case in many transformative development contexts.

The Dubai model works quite obviously, in Dubai. While other countries -- especially those in transition -- cannot copy-and-paste what Dubai has done, particularly on migration, cultural change, and government led-investment, they can still apply lessons from Dubai's experience. Although it may seem that Dubai had the guarantee of Abu Dhabi behind it or capital flows in the Gulf to harness, every country has an advantage, which can be used as a foundation. Egypt has the largest consumer base in the entire Arab world that can drive industry. Tunisia has some of the highest literacy rates and education levels in the region, and an established tourist bridge with Europe. Libya has tremendous oil-wealth and a strong connection to the Sub-Saharan economy.

The fragility of transitional countries means that everything must be done to improve. What Dubai has demonstrated is that there can be positive momentum and development on areas that affect the quality of people's lives and their livelihoods. Two recent cases, however, once again have caused people to deliver a holistic appraisal of Dubai, in the negative. One is of a Norwegian woman who after reporting a rape, was jailed herself (which is under appeal). The second is of a South Asian man being assaulted in a case of road rage, which went viral on the Internet, and now the person who uploaded the video is under investigation himself. Both cases in the end, cast a long shadow on Dubai and all it has accomplished, and should be addressed by authorities, as they remain unacceptable in a progressive society. Yet every discussion about the city and its society cannot be zero sum nor ignore the many dimensions of its identity.

There remain critical challenges in front of it, but there is also something that works in Dubai, and it's about time that some of these lessons are transferred to the wider region.

Taufiq is a Dubai-based political analyst and blogs regularly at TheGeopolitico.com, where the original version of this post can be found.