Normally people often assume that Dubai got rich because of the oil but in reality, it comprises only 7% of the country’s total revenue. Within a short span of time, it has emerged as one of the most important cities in the world and almost everyone with few extra bucks to spend prefers exploring Dubai first.
Today it has more than 75% of the population filled with foreigners but the remaining 25% have ruled the entire state for years and made the whole world go crazy for them. So this all situation definitely leads to one question in everyone’s mind; how did Dubai achieve so much and got so rich?
Prior to oil, these Trucial States (which is UAE today) was more commonly known for pearl industry and it remained as the only source of income for the residents in the villages of the Persian Gulf between the 1770s to 1930s. As soon as pearls became scarce, people living in Dubai and Abu Dhabi started fighting for oil in the late 1950s. Abu Dhabi was fortunate enough to find oil in abundance whereas traders upon not finding anything in Dubai, started to leave as they shifted to other places in the Gulf.
Taking the advantage of the opportunity, the ruler of Dubai in 1958, Sheikh Rashid bin Saeed Al Maktoum, took heavy loans worth billions of dollars to build the basic infrastructure of the city and invested in providing basic resources to the city with private companies that held the control of electricity and telephones lines etc. It also included the expansion of its port and focused on completing UAE’s first airport by 1960.
At the start of 1966, Dubai’s relationship with the UK became very lucrative as the world got to know about the oil fields in the Gulf States. Although Dubai found oil by that time, it was not much, therefore, whatever found had to be used to fund Sheikh Rasheed’s strategy of making Dubai a hub of trade, tourism and finance which later served as the backbone of its economy as well. The decision was indeed a smart one as the world today depends more on renewable energy as compared to oil.
Much of the development in that era was facilitated by the British government. In return, Dubai agreed on serving as a protector for diplomatic concessions. Later during that time of the revolution, Dubai began to ship oil in 1969 which also gave them independence from Great Britain in 1971.
Being a part of Emirates, Dubai flourished independently as its leaders brought diversity in the revenue streams throughout the 1980s for the sake of competing with Abu Dhabi’s growing profit from the oil industry.
Continuing with its strategy, Dubai got its first free zone port in 1985: Jafza, the Jebel Ali Free Zone, which at 52 square kilometers (20 square miles) is the largest in the world.
This was a jackpot for global businesses as they took advantage of the Emirate’s 30 free zones that offer tax breaks, custom duty benefits and lack of restrictions for foreign owners.
Among all the registered Jafza companies, 20 percent came up as a result of foreign investment in Dubai. Today they have around 144,000 employees which help them generate $80 billion in non-oil money and together it sums up 21 percent of the Dubai’s GDP.
As of today, UAE is the third-richest country in the world, with a GDP per capita of $57,744. Majority of this income emerges from the production of goods and provision of services related to petroleum, petrochemicals, aluminum and cement. Besides that, it is also a hub of cheap labor where South Asians come and agree to work in the given conditions.
In the era of globalization today, Sheikh Rasheed’s gamble definitely feels like magic as it turned the deserts into one of the most powerful cities. Every day when it receives tourists and travelers from all around the world on its main airport, which is the largest in the world as well, Dubai directly gets the benefit from its infrastructure which will keep on attracting the world more and more.