Myths and Realities of Development Dubai and South Korea

1
Myths and Realities of DevelopmentDubai and
South Korea
2
Conventional Wisdom of Development

• IMF
• World Bank
• Neoliberalism
• Structural Adjustment

3
Defining Development

• How do we measure development?
• GDP
• Inequality
• Social indicators
• Combination of Factors?

4
Structural Adjustment

• Guarantees of fiscal discipline no more budget
  deficits
• Reduction of public expenditures
• Financial liberalization
• Trade liberalization
• Promotion of foreign direct investment
• Privatization of state-owned businesses
• Deregulation of economy
• Protection of property rights

5
East Asian Developmental State

• Peter Evans Embedded Autonomy (1996)
• Alice Amsden
• Chalmers Johnson
• In Taiwan, Japan, and S. Korea, government
  intervention played a decisive role in promoting
  economic development.
• Shielding Infant Industry
• Subsidies

6
What do you know about the UAE?

• Population 5,432,746
• Confederation made up of the following 7
  Emirates Dubai, Abu Dhabi, Sharjah, Fujairah,
  Ras Al Khaimah, Ajman, Umm Al-Quwain
• Per Capita Income 37, 941
• World Record Growth Rate of 13.4 between
  2000-2005
• Independence 1971
• Largest Sov. Wealth Fund in the world 875
  Billion
• Real GDP in 2006 175 Billion
• Ethnic Diversity 19 Emirati, 23 Arab and
  Iranian,

7
(No Transcript)
8
What did Dubai look like 50 years ago?
9
Population 30,000
10
Population 1.2 million
11
(No Transcript)
12
(No Transcript)
13
(No Transcript)
14
(No Transcript)
15
Dubai Model of Development

• Government led Development
• Fast Decision Making
• Flexible Labor Force
• Leapfrog Industrialization
• Internationalization of Service Provision
• Supply Generated Demand (first mover)
• Market Positioning via Branding
• Development in Cooperation with world class
  partners

16
Government Led Development

• The Executive Office (TEO)
• Five men including the ruler oversee development
  initiatives (Sheikh Mohammed, Sheikh Hamdan,
  Mohammad Bin Ali Al Abbar, Ahmed Bin Sulayem,
  Mohammad Abdallah Al Qarwawi)
• Dubai World, Dubai Holding, Emaar, Dubai
  Municipality
• Centralized decision-making
• Decisions are made quickly without the need for
  consultation
• Exemplified in the construction boom

17
Interview with CEO of Dubai Dry Dock

• Geoff Taylor
• If I want to spend 40 million dollars on an
  extension of the repair facilities here at the
  Dry Dock, I will pass the request to the head of
  Dubai World, Mr. Sulayem who is right under
  Sheikh Mohammed. Usually I will get an answer
  within 30 minutes. In England I would have to
  wait 5-6 months for the request to go through
  various assessments and boards. Here they are
  much more forward thinking, dynamic, and a lot
  more trusty. They trust that the person who runs
  the businesses generally tends to understand the
  business, and as such are in the best position to
  see business opportunities.

18
Flexible Labor Force

• The Dubai government can import specialized labor
  quickly-- without any bureaucratic or logistical
  hassle.
• Construction workers
• Consultants
• Highly Skilled Workers

19
Bypass Industrialization

• EPZ
• Development of a Service Economy (knowledge
  economy)
• Tourism
• Health Tourism
• Film Industry
• Financial Services Hub
• Biotechnology

20
Internationalization of Service Provision

• Due to the small size of its domestic market,
  growth requires expansion overseas
• Active acquisition of businesses that fit Dubais
  strategic profile
• Dubai Ports World
• Emaar (Gated Communities)
• Emirates Airlines (Regional Logistics Hub)

21
Supply Generated Demand

• Martin Hvidt All businesses grapple with the
  question of when to invest. There are two
  general answers to this question Either wait
  until the demand for the good or service on
  wishes to sell is present, or simply to supply
  the goods or services and let it generate its own
  demand.
• Risky and would not be possible without
  public/private partnership
• Dubai Internet City
• Media City
• Palm Islands
• The World
• Dubai Land

22
Market Positioning via Branding

• What makes Dubai such an attractive location for
  tourists?
• Construction of Iconic Buildings

23
Development with world class partners

• Dubai Health Care City Mayo Clinic and Harvard
  Medical School
• Hotel Sector Internationally respected partners
  collaborate such as Hilton, Sheraton, and Hyatt

24
Economic Logic of the Dubai Model

• Service Provision
• Private Education for Expat Children
• Electricity
• Telecommunication
• Visa Renewal
• Licensing
• Hospitalization
• Real Estate

25
Alternative Explanations
26
The Dark Side

• How do you Institutionalize the Dubai Model?
• Human Trafficking
• Terrorism
• International Mafia
• Domestic Apathy and Disengagement
• Expat Rights