The Impact of Industrialization on Dubai

1. Introduction

The UAE has undergone a rapid industrial development in the past decade, with Dubai leading this growth. The Emirate has transformed from a trading and service-based economy to one that is now more diversified and includes manufacturing, tourism, construction and other sectors. This paper presents the impacts of the rapid industrial development in Dubai and its subsequent implication on its other sectors of the economy.

2. Literature Review

2.1 Definition of Industrialization

Industrialization can be defined as the process by which a society or country undergoes economic and social change through the introduction of new manufacturing processes and technologies (Chang, 2005). This process leads to an increase in productivity, which in turn results in higher incomes and improved standards of living. Moreover, it results in structural changes within an economy, whereby traditional agriculture-based occupations are replaced by jobs in industry and services. In the UAE, industrialization began in the 1970s with the discovery of oil reserves, which led to a oil-export based economy. However, since the late 1990s, the country has been working towards diversifying its economy away from oil and gas while also encouraging foreign investment (Abu Dhabi Department of Economic Development, 2009). As part of this effort, various free zones have been established across the country which offers 100% foreign ownership as well as tax exemptions and other benefits (Dubai Free Zones Council, 2016). These free zones have helped attract international businesses to set up operations in Dubai, thereby playing a role in the emirate’s industrialization.

2. 2 What is the drivers of Industrialization in Dubai?

There are several drivers that have contributed to Dubai’s rapid industrialization in recent years. These include:

Infrastructure and Business-friendly environment: One of the key drivers of industrialization in Dubai is its world-class infrastructure and business-friendly environment. The Emirate has invested heavily in developing its infrastructure in order to attract foreign businesses and make it easier for them to operate here. For instance, Dubai International Airport is the busiest airport in terms of international passenger traffic and cargo handling. It is also located close to major markets in Asia, Africa and Europe, which makes it an ideal location for businesses that want to export their products globally. In addition, Dubai’s seaports are some of the busiest in the world and can accommodate large ships carrying cargo containers (Dubai Ports World, 2016). The emirate also has a well-developed road network that connects all its major areas. Furthermore, Dubai offers a range of business incentives such as 100% foreign ownership, tax exemptions and other benefits which have made it an attractive destination for international businesses (Dubai Free Zones Council, 2016).

Strategic location and international relationships: Another driver of industrialization in Dubai is its strategic location and strong international relationships. The emirate is located at the crossroads of Europe, Asia and Africa which makes it an ideal hub for businesses that want to export their products to these regions. Moreover, Dubai has built strong relationships with many countries around the world through its trade deals and investments. For instance, it has signed Free Trade Agreements (FTAs) with China, India and South Korea; three of the world’s biggest economies (Dubai Trade Portal – Government of Dubai, 2016). These agreements have resulted in an increase in trade flows between Dubai and these countries. In addition, Dubai’s port operator, DP World, has made significant investments in ports and logistics companies around the world. This has helped the emirate to establish a global presence and develop its reputation as a leading trade and logistics hub.

Economic stability: Another factor that has contributed to Dubai’s industrialization is its stable economy. The Emirate has been largely unaffected by the global economic recession that started in 2008, due to its diversified economy and strong international relationships. Moreover, Dubai’s economy is growing at a healthy rate of 4-5% per year (Dubai Chamber of Commerce and Industry, 2016). This growth is driven by the emirate’s strong tourism, construction and trade sectors. In addition, the UAE has a strong financial system which provides businesses with the capital they need to expand and invest in new projects. Consequently, Dubai’s stable economy provides a good environment for businesses to grow and prosper.

3. Implications of Industrialization in Dubai

3.1 Social implications

The rapid industrialization of Dubai has led to some social implications such as an increase in income inequality and social tensions. One of the main reasons for this is that industrialization has led to a decline in jobs in traditional sectors such as agriculture and fishing, while creating new jobs in manufacturing and construction. This has resulted in unemployment for those who are not qualified to work in the new industries. In addition, it has also led to an increase in income inequality as those who are employed in the new industries tend to earn much higher salaries than those in the traditional sectors. This has created social tensions as those who are not doing well economically feel that they are being left behind by those who are benefiting from the industrialization process. Another social implication of industrialization is that it has led to an increase in the number of migrant workers coming to Dubai in search of employment opportunities. This has put pressure on the emirate’s infrastructure and social services as well as leading to cultural clashes between the local population and the migrants.

3. 2 Environmental implications

The industrialization of Dubai has also had some negative environmental impacts such as air pollution, water pollution and noise pollution. One of the main sources of air pollution is the burning of fossil fuels by factories and power plants. This has resulted in an increase in levels of harmful gases such as carbon dioxide and sulfur dioxide in the atmosphere. These gases can cause respiratory problems and other health problems. In addition, industrialization has also led to water pollution due to the discharge of toxic wastes from factories into rivers and oceans. This has resulted in marine life being killed or harmed by these toxic substances. Furthermore, noise pollution is another environmental problem caused by industrialization. This is because factories and construction sites tend to produce a lot of noise which can be harmful to people’s health.

4. Conclusion

In conclusion, the industrialization of Dubai has led to both positive and negative impacts on the emirate’s economy and society. While it has contributed to Dubai’s economic growth and modernization, it has also created some social and environmental problems. Nevertheless, the overall impact of industrialization on Dubai has been positive and the Emirate is well-positioned to continue its industrial development in the future.

FAQ

The main drivers of industrial development in Dubai are the city’s strategic location, its status as a tax-free zone, and its pro-business environment.

The industrial sector in Dubai has evolved rapidly over the past few decades, driven by government policies and investments that have encouraged diversification away from reliance on oil and gas revenues.

Key challenges facing industrial development in Dubai today include the need to attract more high-value manufacturing industries, to develop an skilled workforce, and to improve infrastructure.

Some successful examples of industrial development projects in Dubai include the Jebel Ali Free Zone (JAFZA) and the Dubai Industrial City (DIC).

Lessons that can be learned from these examples to inform future industrial development policy in Dubai include the importance of offering incentives to attract investment, of developing comprehensive master plans for new industrial zones, and of investing in quality infrastructure.