Just over 50 years ago, oil was discovered in Dubai. It helped build this modern metropolis in Dubai but the resource accounts for less than 1% of the state’s GDP. Why Dubai is so Rich?
The city is now a global hub and luxury tourist destination that boats the world’s tallest building and a police force that drive a super cars.
In Dubai, police patrols the streets in Ferraris, and Lamborghinis.
Dubai is the home to the tallest skyscraper in the world. It stands almost 3,000 feet in the air and cost the city more than 1 billion dollars.
Dubai is a hub for anything to do with luxurious life.
So how did Dubai get so rich?
In the late 1950’s large oil deposits were found near the UAE’s capital of Abu Dhabi, beginning on hugely lucrative oil industry.
The oil deposits proved to be so vast that presently, they account for a tenth of the world’s oil reserves.
Crude oil exports are responsible for almost $400 billion of the UAE’s GDP.
But Dubai, by itself, isn’t very oil rich.
Reports indicate that in 2010, only around 1% of Dubai’s economy was from oil sales.
One of the main sources of Dubai’s wealth is from its prosperous maritime activities.
It was once a modest fishing town, which by early 20th century had become an important port. Its location, close to both Iran and the entrance of the Persian Gulf, attract merchants from all over the region.
Today Dubai’s main cargo port Jebel Ali is the busiest port in the Middle East and arguably United Arab Emirates’s most valuable commercial asset.
A big reason for shipping terminal’s success is that it’s located inside the Jebel Ali free zone, also known as Jefza.
Jefza is the world’s largest economic zone spread over 57km square . These zones attract businesses with tax breaks, custom duty benefits and no foreign ownership restrictions, all within a developed infrastructure that is runned by an independent authority.
Within Jefza, there are now several thousand companies, accounting for more than 20% of total foreign investment in the UAE. This zone employs 150,000 people helping generate more than $80 billion worth trade, which accounts for 21% of Dubai’s GDP.
The UAE has the world’s sixth largest migrant population, with foreigners making up more than 80% of the people living in the country.
It’s important to note that while Dubai is the Largest and most populous city in the UAE, the richest state is Abu Dhabi, the country’s capital city. It currently holds 10% of the world’s proven oil reserves.
Dubai has the world’s busiest airport for international passenger traffic. It also become a destination for millions of visitors. The state’s vast infrastructure made this possible.
It is said that in year 2000, the international credit boom helped the emirates solidify their place in the Middle East as a financial and cosmopolitan hub.
Dubai was reported as world’s 5th most popular tourist destination in 2014.
There are no corporate taxes except an oil companies and foreign banks, making them an attractive business destination.
Dubai has 14 resident billionaires and is a headquarters of seven of the top 2,000 public companies with combined market value of 65 billion.
Oil reserves gave them money to into economic development. Now the biggest source of Income for Dubai are real estate, tourism and finance.
The real estate industry contributes more than 22.6% of Dubai’s total revenue. Then, there is trade industry which contributes 16% and the finance industry contributes 11%.
Reports Indicate that,Dubai is expected to run out of oil in less than 20 years. Of course the government is very concerned about this.
So they focused a lot of their attention to huge projects that will not only maintain Dubai’s economy but also allow for a lot of growth as well.
Even though the oil have been hugely profitable for a Dubai, it only makes up 4% of the revenue.
The government decrease its dependency on oil. Doing this, the economy not be so affected by the volatility of the oil market.
Thanks to the development of the worlds famous and largest structure Burj Khalifa and the Burj Al Arab, as well as Dubai mall which is the biggest shopping mall in the world as well as innovations such as air-conditioned bus stops.
Dubai is a huge destination for the tourists on the top of that there’s been a massive increase in charges for government services which makes up 74% of the total budget.
Dubai malls gets 80 million visitors a year. It also have the highest concentration of millionaires in the entire world.
So, We can sum-up. Why Dubai is so rich?
- Year 2000 Credit Boom
- Oil Reserves for early economic development
- Government Planning and Schemes(Tax Free)
- Real State Sector(Big Part of GDP)
- Finance Sector
- Tourism Sector
- Head Quarter of many Big Companies