Introduction to globalization is quite impressive and

Introduction

The United Arab Emirates is an amalgamation of seven independent
states located in the Arabian Gulf region. 
The Arabian Gulf borders the region to the north, Saudi Arabia to the
south and west, and Oman borders it from the East. Before to the oil discovery
in the 1950s, the country was a poor colony of Britain. Oil brought swift
economic growth and development to the area and the UAE declared independence
in 1971. Large parts of the country is a desert. However; UAE’s oil is consists
of one-tenth of the world’s total oil and 92% of it, is in Abu Dhabi. The
Population of the UAE is estimated to be around 3 million. Abu Dhabi is the
capital and it is the largest Emirate and It serves as the financial,
transportation, oil producing, and the political capital of the country. Dubai
on the other hand, is the trading hub of the entire Gulf region.  What was a relatively an obscure fishing
village just 4 decades ago, has become one of the wealthiest and most dynamic
countries of the world. The unprecedented infrastructure development is
virtually in every block of the UAE. 
This redoubtable ambition and willingness to adapt to globalization is
quite impressive and frankly bold for a relatively conservative Arab country (Delgando,
Mansur, 2008, p. 16). 

 

Boom-and-bust cycle like the one we witnessed
in 2008, which nearly brought Dubai’s financial system to its knees. Nearly 8
years ago, the emirate of 2.2 million people almost defaulted on its
debt after a real estate bubble burst, causing property prices to sink to half
what they were before the crises. The logical model proposed addresses restructuring
some of UAE’s economic, legal, and financial policies to prevent a bust cycle
similar to that of 2008.  We suspect, by implementing the logical
model’s proposed policies, a boom in trade, tourism and finance will reshape
and repair damages caused by the bust. As a result, Dubai again will restore
its ambitious goals and future funds will be being allocated to build new big
projects. However, some experts and pundits fear the additional investment for
the Expo can be too big for the UAE’s economy to handle (Torchia, Salemm, 2013, p. 3).

            restoring
this image is indicative that the world is recognizing the strengths of UAE’s
political stability and its multifaceted economy (Torchia, Salemm, 2013, p.2). On the other hand,
serious challenges still exist, and the logical model’s recommendations argues
for UAE leaders to restructure their
policy on managing growth instead of creating more growth if they are serious
about preventing another bust. My Research shows that the Expo will draw
over 25 million visitors and create 277,000 jobs and infrastructure spending
will reach $6.8 billion and an overall spending may reach $18.3 billion (Torchia, Salemm, 2013, p. 3).

 

            Logical
Model Summary
Analysis

As a result of a 2002 degree allowing foreigners to
buy properties in Dubai, an unknown fishing village turned into a global hub.
An unprecedented property boom was felt in every block of
the emirate and it lasted for seven consecutive years. Regulations were so loose,
and properties were sold for a large profit within weeks of their initial
investment. Investors were buying and selling daily for profits – without any
attention to live in Dubai. Due the credit crisis and the global recession of
2007, the lending dried up, many foreign investors left and confidence in the
emirate’s over-inflated real estate market dissipated and real estate values
dropped to about 50% of the original value and the stock market fell 70%,
thousands of workers, mostly Asian laborers were sent back to their home
countries. A myriad of housing projects were stalled or scrapped (Torchia, Salemm, 2013, p. 3).

             Dubai’s economy is estimated at $90 billion,
however, these figures are predicated upon grandiose projects announced by
Dubai’s real estate developers in the past year, including a replica of the Taj
Mahal, a residential area with a giant pyramid, and an apartment complex with
penthouses worth $250 million each. Experts predict that interest in real
estate would now rise further. While the Expo will result in long-term benefits
to the Dubai economy and the real estate market, the short-term impact needs to
be managed carefully to avoid the inevitable boost turning into inflation or
over-development (Delgando, Mansur, 2008, p. 16).

             Solutions and Recommendations

 

 The
government must take serious steps to limit the risks to overt another bust.
There are a number of policy measures included in the model which the government
of Dubai can implement to manage booms. For instance, regulating land transactions by instituting a fee and other penalties
is key to deter property speculators. Also, setting rules on banks to restrict
mortgage lending and limit loan exposure can be very effective to promote slow
– yet sustainable growth – and can substantially help bring confidence to the
stock market. Thus, there is no way to prevent shares from rising, because
the excitement factor and the happy sentiment is driving market’s confidence up
the roofs. However, it will take few years for Expo-related spending to have a
palpable impact on the financial market and will initially rise exponentially
and then slow down as spending decreases. 
The Expo will bring about huge economic benefits and we are already
seeing signs showcasing rapid growth (Gabrial,
Rosenthal, 2015, p. 23).

            Government transparency is another
big problem that Dubai and the UAE must tackle. The government continues to
obfuscate the truth about the size of Dubai’s debt. The estimates show that it
is around 110 billion dollars, but experts believe that it is higher than that
and Dubai’s leaders have no option but to come clean if they really want to
establish and gain investors’ trust which is paramount for sustainable and
healthy growth. In the 2008 bust, the alarming exposure of Dubai’s outstanding
debt at the time was a catalyst for Western investors to flee the scene.
Moreover, Nakheel, the main government-owned developer nearly brought Dubai to the
brink of defaulting on its debt, because so much had been borrowed to build
audacious and luxurious projects. If it was not for a $20bl loan from Abu Dhabi
and Saudi Arabia, Dubia’s ship would have sunk. Nearly 50% of the money was
used to bail out Nakheel. Furthermore, doubling or
tripling a transaction tax on property investments is a great policy to to help
investors seek compensation if a project falls through. The combination of
brave rules and weaker economic conditions internationally – can help Dubai
tremendously – because foreigners make up most of its population (Gabrial,
Rosenthal, 2015, p. 23).

             Conclusion

 

Dubai could become the Berlin
or the NYC of the Middle East by providing the amenities and a conducive
business environment that is tantamount to what major commerce and trade cities
provide while offering a more strategic location with less costs.  Nearly two billion people surround the UAE
and they are looking for better work and investment opportunities in a region
that is replete with conflict and ciaos. 
That being said, the government needs to implement more reforms to address issues
like: Mistreatment of Asian workers, securing fair wages to those laborers,
instituting caps on raising rent by landlords, restructuring the economy,
managing growth, and most importantly, going back to what Dubai’s economy was
founded upon: Tourism, transportation, trade, and logistical services. The
uncertainty in the region is looming as a result of the Arab Spring and ongoing
conflicts. Although Dubai’s economy is not reliant on oil revenues, a good
chunk of its investors do. Dubai leaders
must rely on long-term investors who are financially sound and can survive
financial storms, rather than just turning a blind eye to short-term
investments that aim only at immediate profiteering with no intention to invest
in Dubai in the long-term (Torchia, Salemm, 2013, p. 3).