Abu Dhabi and Dubai are two of the three members of the greater United Arab Emirates alongside Sharjah. The federated states heavily depend on oil exports though they are moving towards manufacturing, service and international trade at a dramatic pace. The emirates are headed by President Sheikh Kharifa who doubles as the president of Abu Dhabi. The president unveiled a strategic plan for the Emirates aimed at diversification of the federation’s economy so as to reduce dependency on oil exports. The vision 2030 plan is designed to bring a radical transformation of the economy and increase the role of non-oil sector in the contribution to the GDP growth (Abu Dhabi Council for Economic Development, 1).
Dubai was founded by Bani Yas tribe led by Maktoum family at around 1833 who settled at a creek that fitted as a natural harbor. Thereafter the creek grew exponentially as an important fishing hub and sea trade center (Dubai Department of Economic Development 1). On the discovery of oil in 1966, the proceeds were used to fund infrastructural development of Dubai. Sheik Rashid the leader then initiated the construction of the largest man made harbor in the world at Jebel Ali and free zone which marked the beginning of the world renown market. The visionary developmental leadership that insisted on high quality of infrastructure, a foreign investor friendly environment, zero tax on personal and corporate income and low duties on imports encouraged the development of Dubai into a trade and tourist center.
Guided by the 2020 strategic plan, the emirate with the help of other stakeholders such as Abu Dhabi have embarked on the development of the small and medium enterprises which form the bulk of the emirates industrial sector accounting for 95% of all the registered firms in Dubai. This form of determined investment promotion has produced one of the most prominent sea ports in the world. The investment has led to increased levels of productivity and efficiency by encouraging technical development and innovations.
Synergy between Abu Dhabi & Dubai Department of Economic Development
Bilateral Corporation between Dubai Department of Economic Development and the Emirate of Abu Dhabi have produced important synergies that have continued to spur the development growth of Dubai and the United Arab emirates as a whole. For example, the two emirates have embarked on manufacturing and media events campaign aimed at showcasing the Emirates as an important investment destination to the world (Johnston 4). These investments indicate robust investment and growth in non oil and gas sectors. The Abu Dhabi national Exhibitions held in October of this year in Abu Dhabi was an important occasion to show case the United Arab Emirates as a favorite investment and, tourism and cultural destination to the world.
The Middle East Manufacturing Exhibition (MEMEX) event was meant to display the state of art machinery, technology, services and manufacturing solutions (Department of Economic Development supports emerging markets 1). These exhibitions are touted to be some of the most successful strategies in luring foreign direct investment in the United Arab Emirates. Such events which are often accompanied by aggressive media campaigns have continued to buoy up the popularity of the United Arab Emirates to foreign investors.
Similarly the Signage, imaging and media show held this year achieved the same effect in show casing the Emirates advancement in cutting edge technology thereby opening up in new markets for their products and also pulling foreign direct investments (Department of Economic Development supports emerging markets 1). The magnificent event has been dubbed as the regions most comprehensive in the marketing and communication industry thereby attracting throng s of international exhibitors and attendants (Johnston 5). The endorsement of the exhibitions by the department of Economic department is a signification of the UAE’s support of the investment in the local industry and the manufacturing sector. These concerted efforts by the two countries are bearing tangible fruits as trade volumes with the outside world has continued to sour up.
As a result of the robust marketing and communication industry in Abu Dhabi and Dubai, new media usage has continued to grow. The SIM exhibition has continued to market the new state of art media technology to the market players (Johnston 3) thereby becoming an important contributor to the growth of the country’s GDP. Further more the drastic rise of the new media promises to contribute largely to the future growth of the Emirates GDP.
Another area where the increased synergy has worked is in bailing out of the Dubai ailing economy. Dubai is country reeling from the effects of the global crisis with a foreign debt of close to $80 billion that is threatening to cause an economic collapse. Indeed the government announced recently that it had been unable to service the debt. Since the Dubai economy is heavily intertwined with the global market, the recessionary effect in the global market was expect to have an adverse effect to the economy. To rescue it, the wealthier partner was quick to come to its aid by providing liquidity support trough a $32 billion monetary injection into the Dubai banks. As a sign of higher support, the Abu Dhabi purchased the $ 10 billion bond floated by the Dubai government in the UAE central bank (International: Abu Dhabi May Seek To Centralize 1).
Role of media
The media has a very large impact on the movement of stocks in the Emirates. Post media coverage improves the performance of the stocks while negative publicity is detrimental to the stock market. Speculative tendencies as a result of psychological factor as are the driving force of the market rather than individual rationality (Media coverage has serious impact on UAE stock movement, says media intelligence agency 3). The fluctuation of stocks in the UAE sock market is thus a result of the favorability of a company by the media.
The entry of international media will also aid Abu Dhabi and Dubai to reach out a larger market especially during the current financial crisis that is wrecking havoc in the federation (Critchlow 1). As the emirates seek to diversify their product proposition in the World market, the entry of CNN for example will provide an opportunity for the emirates to advertise their manufacturing and tourism potential to the world. Abu Dhabi is particularly keen on attracting $100 billion worth of international media infrastructural investment in the UAE. However, the government still maintains checks over the media coverage to avert negative publicity which is detrimental to the country’s economy as witnessed in the capital market.
Dubai has established itself as a renowned global brand which is contributing heavily to attraction off the foreign direct investment. From the white beaches, seven star hotel and towering sky scrapers that dominate the skyline alongside the man made beaches; it has created a mark in the world as an important tourist and investment destination (Ghose 1). To facilitate higher levels of development, Dubai and Abu Dhabi have opened up partnerships in media and technology, sports and infrastructural development (Strategic Partnerships in Dubai 1).
Possible strategies and opportunities
Greater centralization of the Emirates will help Abu Dhabi to bolster its foreign relations and be able to play a greater role in the regional and international affairs. Worth noting is the fact that the high autonomy of the individual emirates has a negative impact in major infrastructural development. For example, the control of the capital market, major institutions and key sectors are vested to the individual emirates. Thus the role of the central bank has been watered down as an important regulatory and development stimulating institution. This has made it hard to mobilize resources for bigger projects thereby undermining development. As a result there is need for relative greater centralization of the core functions.
To boost economic growth, Dubai will have to restructure its business entities to increase their viability. Continuous reorganization of the market is important to cut operating costs and losses. Nonperforming entities will needs to be shut down while the government ought to cease its investments in nonperforming and unviable ventures. In addition to attaining higher leverage, integration of various production sectors will be required as part of the structuring and positioning of the brand. Its great airport, world class golf and tennis tournaments and the great hotel industry will be an important point to start from in the branding process.
Advertisements will also to play a larger role in the development of the two emirates. Advertisements will help the appeal to a larger market thereby increasing their publicity across the world. This will particularly help in penetrating especially the emerging markets and other untapped potential markets. In addition an integrated approach will be require to jointly carry out research, exploration and production of energy so as to meet the world demand that is rising fast (UAE calls for integrated synergy between oil producers and consumers 1)
To leap higher benefits from the synergies produced by the cooperation, federal institutions will need to be strengthened so as to be able to respond efficiently to the needs of the federation. The federal government will have to play a bigger role in such areas as customs which are controlled by the individual emirates. This will help to harmonize their functionality besides helping to spur faster growth of the emirates. The emirates will also achieve higher bargaining power in the international market. More areas of cooperation will also need to be explored especially in the energy sector, infrastructural development and tourism development which have shown to have a very great growth potential.
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