University of Helsinki
By Blen Hailu, Tiina Raasakka, Diane Sheehy & Sara Vanhanen
The authors are students of Global Development Studies at the University of Helsinki
Aerial view of Dubai’s artificial Palm Islands. Source: Adobe Stock.
In January 2023, Dubai announced an $8.7 trillion economic plan to boost trade, investment and global hub status of the city. Mohammad bin Rashid al Maktetoum, the ruler of Dubai has said he aims to double the size of its economy in the next ten years and become “one of the top three cities in the world”. This complements popular images of Dubai.
But this oil city was not always prosperous. In 1822, it was a fishing and pearling village with a population of less than 2000 inhabitants, with piracy additionally playing a consistent part in its economy. The Gulf area is generally known for its oil which has brought affluence to some, but not to all. For Dubai, though, its transformation is as much about oil as it is about urban economic strategy and policy centred on trade. Dubai is a city and an emirate in the United Arab Emirates, which are in the Gulf area. The Gulf Area was first colonized by the Portuguese who controlled the area from 1500 to 1750, and later by the British. It presented a strategic geopolitical location as an entrepot between Asia, Africa and Europe created a great opportunity for its continuous importance as a trade hub in the region. Throughout the early and mid-20th century Dubai remained under British influence, enabling, for example, British companies to have exclusive contracts with Dubai. Even so, this city has struggled with two different, but interlinked, forms of migration: expatriates and foreign labor. These migrant flows have built, and today sustain, Dubai, but their differential treatment and their general precarious form pose a risk to Dubai’s current 2040 sustainability plan.
Even though Dubai’s structural economic changes have taken place over several decades, the most significant shifts occurred in the last few decades and were triggered by the discovery of oil in 1966. UAE holds the eight largest oil reserves globally. Although Dubai’s oil reserves are relatively small, amounting to only 4 billion barrels compared to Abu Dhabi’s reserves that make up 92% of the UAE’s total of 98 billion barrels, the discovery of oil played a crucial role in financing the early and rapid expansion of the city’s infrastructure from the construction of dry ports and modern banking systems to the establishment of the Chamber of Commerce. What made this possible can be explained through a combination of factors, ranging from an open-door policy to migration, a certain developmental state, and a particular type of free trade.
Central to these factors in particular is migration. The Harris-Todaro Model suggests that the decision to migrate from rural to urban areas is made rationally, based on expected income differentials. But, in Dubai, the developmental state has developed a policy to attract labour in a way that defies this idea of rationally defined and enacted equalizing flows – the kafala system. In Dubai, migration is guided by sponsorship-based migration policy characterized by temporariness and precariousness, where the visas of the workers are tied to their employers and very few migrants can attain permanent residency.
Dubai’s development, still, has been largely dependent on foreign workforce ━ it is a city and economy sustained by migration. Historically Dubai began to attract migration from neighboring countries during the late 19th century and already in the mid-20th century foreign workers constituted over around half the population in Dubai. In 2022, 88.52% of Dubai’s population was formed by expatriates. Dubai attracts both highly educated people from the Global North ━ those labeled as expatriates ━ as well as lower educated people from the neighboring areas ━ those labeled as foreign labor. Both types of migrants have been necessary for the growth and development of Dubai and this outsourcing of Dubai’s workforce has enabled the city to react extremely swiftly in the face of new strategic opportunities or development agendas.
First, in terms of expatriate workforce, Dubai’s economy is built on trade, and it has open-door, pro-business policies that attract new businesses. Free zones aimed to expand the economic growth of Dubai began with the Jebel Ali free zone, which has grown from 19 companies in 1985 to 9,500 businesses today. It attracts 23.9% of Dubai’s Foreign Direct Investment, which in the first half of 2022, was the world leader. In these areas, expatriates and foreigners can have full ownership of companies, 100% repatriation of capital and profits, 100% exemption from customs duties and corporate and income taxes and modern infrastructure. Even so, these expatriates nevertheless remain outside privileges catered towards the nationals, such as state-allocated land. Even though Dubai’s image, and thus economy thrives on the image of cosmopolitanism, its governance structures are ruled by logics of non-integration.
And second, foreign labor is largely driven by the image of luxury Dubai presents. Dubai is known around the world for its modern infrastructure and tourist destinations including Burj Khalifah, Dubai Mall and the “most luxurious hotel in the world” the Burj Al Arab. It reported 14.36 million international tourists in 2022. Tourism in Dubai is based on luxury tourism focusing on high-end shopping, transport, and tour operations which are supported by events such as conferences and sporting events. The building of the glamorous, consumption-heavy and megaproject-driven tourism industry, has, however, been driven not only by the extremely heavy use of the environment, but by migrant workers in conditions which Human Rights Watch describes as forced labor, with issues of unlawful arrests, detentions, torture, and deportations.
Dubai represents a case of rapid transformation from a small village to a global cosmopolitan centere. First enabled by oil, its developmental urban governance combined with economic liberalism have built it into a diversified economy, driven by migration and an image of luxury. Under this image, however, lies another picture of everything made invisible, from exploited low-income foreign labour to a hierarchical labour structure. Still, this oil city depicts a case of the potential and the problems of the urban developmental state, committed to using urban resources to drive growth and change.
In the light of growing questions about sustainability, modern urbanization that is built on perpetual increase in production and consumption is unsustainable. Mumtaz contends that a city is sustainable when it fully recycles what it consumes. Julian Agyeman shows that a sustainable city is inclusive. Sustainable urban development is illusory in Dubai’s environment of differentiated luxury.