Dubai's Economic Model: Sustainability & Challenges

This assignment delves into the intricate workings of Dubai's economic structure. It examines the feasibility of Dubai's model adapting to various international contexts, considering factors such as government spending, political stability, unemployment rates, and fiscal deficits. The analysis focuses on both GCC and non-GCC countries, evaluating their capacity to accommodate Dubai's economic model.

Running head: MACROECONOMICS
Macroeconomics
Name of the student
Name of the University
Author note

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Executive summary:
This report is meant to analyze the economic growth plans for the economy and trace whether it
is possible to introduce this framework into the other country. Using the EMBA studies, the
report has found that it will be a devastating situation if the Dubai’s framework is introduced in
other nations. Owing to the political turmoil and high amount of fiscal deficit, both the GCC
countries and non-GCC countries will face stagflation in their economy and it will cause further
deterioration of the growth rate for the countries. The report has mentioned SWOT analysis of
the Dubai’s economy and traced that the country has high potential to reach better sustainability
situation, which is not possible for the economies, which are going through recession or peak
term of their business cycle.

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Table of Contents
Introduction:....................................................................................................................................3
Aims and objective of the research:.................................................................................................3
Literature review:.............................................................................................................................4
Growth strategy of Dubai economy:................................................................................................4
Risk analysis of Dubai economy:....................................................................................................5
The implication of Dubai economy on GCC countries:..................................................................6
Comparison of Dubai model with other economies:.......................................................................6
Conclusion:......................................................................................................................................7
Reference:........................................................................................................................................8

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Introduction:
Dubai is one of the largest economies around the world and it has been growing at a
steady rate to become a world leader. The country is termed as the success story of the Arab
world owing to the fact that it is the largest economy in Middle East (Brizi, Lust and Woolcock
2015). The country started to grow back in 1980 and since then it has transformed itself as one of
the best destinations for the Foreign Direct Investment (FDI) from the western economies (Henry
and Jennie 2016). Based on the oil economy and resources of natural gas, Dubai has become a
brand, which is acknowledged as the potential place for growing business. With ever-increasing
government spending, and growth of the infrastructure in the country, the domestic economy has
become one of the most sustainable economies around the world (Delgado 2016). In recent days,
there has been a strong debate regarding the issue that whether it is possible to export the
Dubai’s economy in the other GCC countries or not. This report is meant to analyze this
phenomenon and trace out the feasibility of the proposition.
Aims and objective of the research:
Very few academic instances unfold the economic growth and plan of Dubai. Most of the
current information regarding the economic condition of the country is achievable through media
coverage, business reviews and magazine (Harvey 2017). However, being a top ranking
economy around the world, Dubai has huge importance in the global market. Thus, this report
considers economic condition of the country and it tries to analyze whether it is possible to
export the Dubai’s economy to the other GCC and non-GCC countries or not.

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Literature review:
There is very few evidence of academic researches on the Dubai’s economy. It has
constrained the scope of analysis of the possibility that whether the present economic growth
structure of the country can be implied to other nation or not. According to the Faris and Soto
(2016), Dubai’s economy is presently growing due to the successive strategic plans taken by the
government back in 1996, 2003 and 2007. Besides this, since 1980, oil economy of the country
has aided it to have a strong financial condition. Along with this, diversification in the economic
activities of the country has aided it to reach sustainability. As per the words of Elbadawi (2016)
Dubai’s economy has grown eleventh time during the period of 1975 to 2008 compared to its
previous economic condition. When it comes to other GCC countries, then it can be seen that all
of the countries lag far behind from the Dubai’s Gross Domestic Product (GDP). Besides this,
political turmoil is higher in other GCC countries and there is lack of government intervention in
the economy (Sbaouelgi and Bulila 2016). Moreover, there is lack of skilled labour in the other
GCC countries that makes them constrained in the case of production in goods and services. One
of the main differences of Dubai’s economy is that it has great amount government spending.
Countries other than non-GCC economies, have higher fiscal deficit that constraint them to
include the Dubai’s economy.
Growth strategy of Dubai economy:
Qualitative and quantitative research of Dubai’s economy has displayed that the economy
has portrayed great amount of growth through last three decades. As the strategy of growth,
economy of Dubai considers the importance of government intervention (Hartman and Zandberg
2014). One of the major stimuli towards the economy was oil and gas production of the country.
Besides this, the economy achieved great level of benefit from the skill development program of

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the government and economic reforms in recent times. Moreover, Green Growth Strategy
introduced by the UAE government back in 2012 has aided the economy to survive the recession
effect, which took place back in 2008 (Alajoutsijärvi, Juusola and Lamberg 2014). Besides this,
the employment policy of the economy is flexible enough to hire and fire employees smoothly
that has curtailed the growth rate of the economy and lead it towards a smooth transition from a
lagging economy to a growing economy.
Risk analysis of Dubai economy:
Dubai is one of the largest economies in the world and it ranks 25 among the world’s best
economies. Besides this, the economy has highlighted great potential to reach sustainability by
the end of 2030 (Antiado, Castillo and Tawadrous 2017). Various researches have used the
SWOT analysis on Dubai economy and they have highlighted various strength and weaknesses
of the economy.
Strength Weakness Opportunity Threat
-- Economy has great
investment activity
-- High amount of FDI
-- Skill development
programs
-- Availability of oil and
natural gas
-- Country lacks
diversity in its economy
-- External balances are
tending towards weak
position
-- There is lack of
public finance data for
analysis
-- Economy of Dubai
can introduce new
goods and services
-- Country has
possibility to enhance
its capability of
expanding market by
incorporating newer
business
-- Huge external assets
are on e of the main
threat to the economy of
Dubai
-- Political turmoil
present in the economy
can act as the negative
stimuli towards the
Dubai’s economy
Table 1: SWOT analysis of Dubai
Source: (Created by Author)

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Above risk analysis of the Dubai’s economy portray that country is in stable condition,
however there is scope to expand it too largely. Compared to other nations, Dubai has fewer
threats in the world market. Dubai’s airline and oil market is one of the major factors that cause
the economy to have cannon balling its GDP (Elbanna et al. 2017).
The implication of Dubai economy on GCC countries:
Countries like UAE, Saudi Arabia, Oman, Bahrain and Qatar are the part of the Gulf
Cooperation Council (GCC) (Ulrichsen 2016). This regional political organisation is aimed
provide a better cooperation among these economies and enhance the trade. However, it can be
seen that all of the countries have different economic structure and they follow different plan for
the economy. Among all of the GCC countries, UAE is the richest one and implying their
structure into the other economies will not be beneficial. Domestic economies of the other GCC
nations have fragile political condition, which will make the amalgamation into a devastating
situation (Lekhraibani, Rutledge and Forstenlechner 2015). Moreover, when it comes to other
non-GCC nations then the lack of funds are one of the main reasons that can lead the conjugation
into a devastating situation for them too.
Comparison of Dubai model with other economies:
Comparison of Dubai’s economy with both the GCC economies and non-GCC
economies portray that Dubai is a growing economy and it has great amount of government
spending (Snyder 2015). This aids the economy to have lower unemployment level and a
sustainable growth rate. Monarchy system of the government helps the country to have a stable
financial condition; however, political turmoil is one of the major concerns for the economy
(Harvey 2017). Comparing the Dubai’s economy with the help of EMBA programme, the report

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has found that it will not be possible for other economies to adhere with it due to lack of public
finance and lower level of skills.
Conclusion:
The report has analyzed the Dubai’s economic performance and it has found that the
country’s economy is reaching towards better sustainability. Lower amount of unemployment
and highest GDP in among the GCC countries; make Dubai one of the best economy around the
world. From the comparison of the economy of Dubai with the other GCC nations, it has been
found that other nations are not in a position to absorb the economic condition of Dubai. Due to
lack of government spending and political turmoil, GCC countries like Egypt, Oman, and Iran
will not be able to accommodate the Dubai’s economic structure. When it comes to non-GCC
countries like Singapore, China, and Africa, accommodating Dubai’s economy is not possible
owing to high level of unemployment and great magnitude of fiscal deficit.

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Reference:
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Alajoutsijärvi, K., Juusola, K. and Lamberg, J.A., 2014. Institutional logic of business bubbles:
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Delgado, P.A.A.D.L., 2016. The United Arab Emirates case of economic success: the Federal
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