Global Cities of Tomorrow; The rise of Dubai and its place in the future global city landscape

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1 Global Cities of Tomorrow: The rise of Dubai and its place in the future global city landscape Sofie Nilsson and Bryans Mukasa 20150109 1.0 Background 1.1 Introduction The quest for global city status is so apparent today, accelerated by globalisation (Taylor 2011; Taylor 2004; McCann and Acs 2011). A city’s competitiveness at the global stage is determined by several factors, which according to The Economist Intelligence Unit (2013), create both sustainable economic growth and provide a favourable business and social atmosphere for those who live, work, visit, consume, and play in the city. Moonen and Clark (2013, p. 2) point out that “cities are now the major sites where challenges around the new economy, sustainability and resilience, equality, infrastructure, leisure and culture are all played out”. As such, a city’s capacity to attract and retain businesses, visitors, talent, and capital gives it a competitive advantage over other cities. Historic world cities, London, Paris, Tokyo, and New York have continuously embarked on consolidating their relative positions within the global city hierarchies gradually transforming from being strongholds of imperial power in the past centuries to dominant centres of global economic and financial flows in the 21st century (Taylor 2004). The ambition for global city status has also reached many other cities worldwide, with Singapore and Hong Kong closing the gap with the top four in recent years given the increasing foreign investments into the cities and growth of both their financial and tourism sectors (Moonen and Clark 2013). With Singapore and Hong Kong having transitioned into global cities, Shanghai, the financial and cultural capital of China, now tops the list of emerging world cities (Moonen and Clark 2013 p.33). However, of interest to this study is Dubai, which ranks second and has established itself as an important gateway in the Middle East and the Gulf region. For almost half a century now, Dubai has been pursuing world city status, emerging as a small trading port and fishing village in the 1900s into a major global tourist destination, financial centre, and rising real estate powerhouse today (Marchal 2005; Pacione 2005). According to Pacione (2005), Dubai has become a city of regional importance, and a significant player in the global urbaneconomic system. The global and local forces driving its growth are deeply grounded within a historical and geographical context. Its ports are close to regional and global markets, it has had relative stability in a region with political

Transcript of Global Cities of Tomorrow; The rise of Dubai and its place in the future global city landscape

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Global  Cities  of  Tomorrow:  The  rise  of  Dubai  and  its  place  in  the  future  global  city  landscape

Sofie  Nilsson  and  Bryans  Mukasa

2015-­‐01-­‐09  

1.0  Background   1.1  Introduction The  quest   for  global  city  status   is  so  apparent   today,  accelerated  by  globalisation  (Taylor  2011;  Taylor  2004;  McCann  and  Acs  2011).  A  city’s  competitiveness  at  the  global  stage  is  determined  by  several  factors,  which  according  to  The  Economist  Intelligence  Unit  (2013),  create   both   sustainable   economic   growth   and   provide   a   favourable   business   and   social  atmosphere  for  those  who  live,  work,  visit,  consume,  and  play  in  the  city.  Moonen  and  Clark  (2013,  p.  2)  point  out  that  “cities  are  now  the  major  sites  where  challenges  around  the  new  economy,   sustainability  and  resilience,  equality,   infrastructure,   leisure  and  culture  are  all  played  out”.  As  such,  a  city’s  capacity  to  attract  and  retain  businesses,  visitors,  talent,  and  capital  gives  it  a  competitive  advantage  over  other  cities.   Historic  world  cities,  London,  Paris,  Tokyo,  and  New  York  have  continuously  embarked  on  consolidating   their   relative   positions   within   the   global   city   hierarchies   -­‐   gradually  transforming  from  being  strongholds  of  imperial  power  in  the  past  centuries  to  dominant  centres   of   global   economic   and   financial   flows   in   the   21st   century   (Taylor   2004).   The  ambition   for   global   city   status   has   also   reached   many   other   cities   worldwide,   with  Singapore   and   Hong   Kong   closing   the   gap   with   the   top   four   in   recent   years   given   the  increasing   foreign   investments   into   the   cities   and   growth   of   both   their   financial   and  tourism   sectors   (Moonen   and   Clark   2013).   With   Singapore   and   Hong   Kong   having  transitioned   into   global   cities,   Shanghai,   the   financial   and   cultural   capital   of   China,   now  tops  the  list  of  emerging  world  cities  (Moonen  and  Clark  2013  p.33).  However,  of  interest  to   this   study   is   Dubai,   which   ranks   second   and   has   established   itself   as   an   important  gateway  in  the  Middle  East  and  the  Gulf  region. For  almost  half  a  century  now,  Dubai  has  been  pursuing  world  city  status,  emerging  as  a  small  trading  port  and  fishing  village  in  the  1900s  into  a  major  global  tourist  destination,  financial   centre,   and   rising   real   estate   powerhouse   today   (Marchal   2005;   Pacione  2005).  According   to   Pacione   (2005),   Dubai   has   become   a   city   of   regional   importance,   and   a  significant  player  in  the  global  urban-­‐economic  system.  The  global  and  local  forces  driving  its  growth  are  deeply  grounded  within  a  historical  and  geographical  context.  Its  ports  are  close  to  regional  and  global  markets,   it  has  had  relative  stability  in  a  region  with  political  

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instability,  and  it  has  had  trade  links  with  Africa,  Middle  East  and  Asia  long  before  the  20th  century   (Marchal  2005).   Its  exponential  growth   in   the  past   fifty  years   is  however   largely  attributed   to   the  discovery  of  oil   and   the   “liberal  economic  approach  of  government   that  sought   to   attract   inward   investment   to   a   low-­‐taxation,   business   friendly,   and   politically  stable  environment“  (Pacione  2005,  p.  3).   It   has   also   been   planning   for   a   future   without   oil,   a   key   aspect   to   its   sustainable  development.   By   the   year   2025,   Dubai   is   predicted   to   be   ranked   23th   in   the   global   city  hierarchy,   ahead   of   current   influential   cities   such   as   Berlin,   Shanghai,   and   Brussels   (EIU  2013).  Nevertheless,  its  lack  of  pluralism  in  the  political  system,  low  numbers  of  women  in  the  workforce,  questionable  working  conditions  of  the  migrant  labour  force  have  attracted  global   attention   and   human   rights   issues   have   been   reported   by   various   studies   (Haken  2011;   The   Library   of   Congress   2007;   Pacione   2005;   UNICEF   2011).   The   global   financial  crisis  also  tested  its  growth  strategy  and  perhaps  raised  a  lot  of  questions  about  the  ‘Dubai  model’.   1.3  Aim  of  study The  principal  aim  of  this  paper  is  to  examine  Dubai  as  an  emerging  global  city.  It  discusses  factors   that   influence   its   competitiveness   and   are   fundamental   in   defining   its   position   in  the   global   city   networks   in   future.     The   aim   of   the   study   is   approached   through   the  following  central  questions:   ● How  has  Dubai  developed  over  the  years?  ● Are  other  cities  around  Dubai  complementary  or  competing?  ● What  can  Dubai  offer  in  the  global  city  network?  ● What  success  factors  drive  Dubai’s  role  in  the  regional  and  global  city  networks?  ● What  limitations  are  hindering  Dubai’s  competitiveness  in  the  global  network?  ● How  can  Dubai  improve  its  image  -­‐  become  more  attractive  and  competitive  at  the  

global  stage?     1.4  Methodology Various   think   tanks  and  researchers  have  provided  several   indicators  of   competitiveness  and  criteria  for  ranking  global  cities  (Moonen  and  Clark  2013;  Globalization  and  the  World  Cities  Group   (GaWC)  2014;  Taylor  2004).  This   study  has  adopted  eight   thematic   clusters  from  The  Economist  Intelligence  Unit  (EIU  2013)  upon  which  to  examine  Dubai’s  strengths  and  weaknesses   as   an   emerging   global   city.   To   ensure   that   the   selected   clusters   cover   a  broad   spectrum   of   Dubai’s   performance,   they   have   been   modified   where   necessary   in  accordance  to  the  data  provided  by  Moonen  and  Clark  (2013).  The  data  covers  150  global  city   indexes,   benchmarks,   comparative   rankings,   and   other   publicly   available   data   from  literature  sources,  global  development  organisations  such  as  the  UN  Habitat  and  the  World  

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Bank,  statistics  organisations,  and  business  consultancy  firms.  We  have  ensured  that  where  statistics  are  presented  in  this  study,  we  provide  information  for  the  latest  available  year.  The  thematic  clusters  are:   1.  Economic  performance To  examine  the  economic  performance  of  Dubai,  we  consider   the  growth  potential  of   the  city   by   analysing   its   real   GDP   growth   potential   until   the   year   2025.  We   also   discuss   the  market   size,   cost   of   living   and   size   of   the   middle   class   households   (average   annual  consumption  for  the  middle  class  taken  as  US$14,000  and  above  (EIU  2013)).   2.  Human  Capital This   discussion   is   essentially   about   Dubai’s   demographics   -­‐   the   implications   of   migrant  workers   and   the   productivity,   and   health   of   the   labour   force.   We   try   to   answer   key  questions   such  as:  How  skilled   is  Dubai’s  workforce?  How  many  women  are  parts  of   the  workforce   and   what   implications   does   it   have   on   Dubai’s   competitiveness?   How   is   the  quality  of  education?   3.  Financial  Maturity For  purposes  of  this  study,  we  evaluate  the  efficiency  of  Dubai’s  financial  infrastructure  to  ascertain   whether   the   city   is   diversified   enough   to   compete   with   established   global  financial  clusters  such  as  New  York  and  London.   4.  Global  Appeal In   this   category,   Dubai’s   global   attractiveness   is   assessed   based   on   the   presence   of   the  Fortune   500   companies,   reputable   institutions   of   higher   education,   and   global   research  institutes  and  think  tanks.  These  entities  should  either  have  headquarters  in  Dubai  or  use  it  as  a  high  connectivity  gateway  to  global  markets  (Taylor  2004).   5.  Governance The  effectiveness  of  the  government  to  formulate  and  implement  strategies  for  economic,  socio-­‐cultural  and  political  development  is  assessed.  A  comparison  between  authoritarian  governments  and  those  that  allow  more  civic  and  private  sector  engagement  is  also  made.   6.  Physical  Capital This   category   explores   the   transport   and   communication   networks   of   Dubai.   Physical  infrastructure   such   roads   and   railways,   airports   and   seaports   play   an   important   role   in  connecting  a  city  to  the  global  community.   7.  Environmental  Sustainability

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In   a   time  when   the  world   is   faced  with   rapid  urbanisation   and   the   challenges   of   climate  change   such   as   rising   sea-­‐levels   (IPCC   2014),   the   environment   is   increasingly   playing   a  crucial   role   in  determining  where  people  want   to   live,  work,   play,   and   visit.   In   order   for  emerging  world  cities  such  as  Dubai  to  compete  favourably  with  already  established  ones,  they  need   to   formulate  robust  ways   to  become  more  resilient   to  both  anthropogenic  and  natural   catastrophes.   In   this   category,  we   discuss   Dubai’s   commitment   to   combat   global  and  local  environmental  issues  and  its  risks  to  natural  hazards.   8.  Social  and  Cultural  character The   social   and   cultural   character  of   the   city   refers   to   those  aspects,  which  make   the   city  more   liveable.   Opportunities   for   recreation,   leisure   and   hospitality   make   a   city   more  attractive.  A  key  aspect  to  discuss  in  detail  is  Dubai’s  investment  in  global  sports  events  and  the  resultant  economic  benefits. The  list  of  indicators  discussed  under  each  cluster  (success  factors  (+)  and  limitations  (-­‐))  in  the  tables  below  are  adopted  and  modified  from  EIU  (2013,  pp.  32-­‐33).   2.0  Discussion  and  Analysis 2.1  Economic  performance   Dubai   remains   the   highest   ranked   city   in   the   economic   potential   category   in   the  Middle  East.   In  2011,   it  attracted  30%  of  all   the  foreign  direct   investment  (FDI)  projects   into  the  region,  which  was  four  times  its  closest  rival.  It  maintained  its  number  one  position  in  the  region  in  2012,  a  year  in  which  13%  of  the  FDI  projects  invested  more  than  100  million  US  dollars   in   its   economy   (fDi   Intelligence   2013).   The   city   attracted   25   new   international  retailers  across  all  sectors  in  2012,  the  same  number  as  Singapore  and  earning  it  a  spot  in  the   top   five   cities   to   attract   new   retailers.   It   is   also   becoming   more   affordable   while  retaining  its  economic  competitiveness;  although  it   is  still  the  second  most  expensive  city  buy  clothes,  after  Tokyo  (Moonen  and  Clark  2013).   In  the  figure  to  the  right,  a  positive  trend  could  be  seen  in  the  GDP  per  capita  and  GDP  per  employee   (+11%   and   +15%)   in   the   city   of   Dubai,   compared   to   the   whole   United   Arab  Emirates   (UAE)   (Haryopratomo   et   al   2011).   Yet,   only   a   small   part   of   the  GDP  per   capita  growth   could   be   explained   by   the   increase   in   labour   productivity.   This   is   because   the  population  grew  with  7%  and  almost  everyone  came  from  foreign  countries.

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Figure  1  Dubai’s  nominal  GDP,  GDP  per  capita,  GDP  per  employee  and  population  from  2005-­‐2010.  (Dubai  Statistics  Center  2011  cited  in  Haryopratomo  et  al  2011) Part  of  Dubai’s  success  is  also  related  to  money-­‐laundering  and  loose  banking  regulations  (Brook  2013;  Marchal  2005).   In  order  to   improve   its   image,   there   is  need  to  address  this  issues  through  formulating  more  efficient  economic  policies  and  structures. Summary  of  Economic  performance  

Indicator Score Description

Nominal  GDP  (PPP) (+) Highest  in  the  Gulf  region

GDP  per  capita   (+) Increasing  in  Dubai  compared  to  the  rest  of  the  UAE  

Households  with  annual  consumption  >US$14,000  (PPP)

(-­‐) While   the   middle   class   is   growing,   the  gap   between   the   rich   and   the   poor   is  increasing

City  real  GDP  growth  rate (+) Increasing   until   the   financial   crisis   in  2009

Regional  market  integration (+) Part  of  the  Gulf  Co-­‐operation  Council  and  other  economic  agreements   It   also   benefits   from   collaboration   with  other  cities  within  the  UAE

 

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2.2  Human  Capital In  the  late  1960s,  immigrants  from  India,  Pakistan,  Iran  and  Afghanistan  were  attracted  by  the  merchant  tradition  of  wholesale  and  retail  trades  of  goods  in  Dubai  (Pacione  2005).  In  the  decades  that  followed,  the  rapid  population  growth  due  to  the  economic  expansion  in  the  oil   industry  created  a  demand  for  a  skilled   labour   force  and  this  expertise  could  only  been   satisfied   from   foreign   countries.   Despite   policy   regulations   for   illegal   immigrants,  96%   of   the   population   is   foreign   born.   This   is   high   compared   to   New   York,   with   37%  immigrants  (Brook  2013).  The  productivity  of  a  city’s  labour  force  is  significantly  enriched  by   the  presence  of   foreigners,  especially   in  cases  where   the   local  population   is   lacking   in  numbers,  skills  and  knowledge  (The  Economist  Intelligence  Unit  2013). The  demographic  profile   is  characterised  by  a  dominance  of  economically  active  males   in  the  20-­‐40-­‐age  range,  both  visible  in  expatriate  and  total  population  (figure  1).  In  the  figure,  the  lower  proportion  of  women  is  also  visible.  

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Figure  2  Population  pyramids  by  age  and  sex  for  total  and  expatriate  population  (Pacione  2005)   UNICEF  (2011)  notes  that  the  female  participation  in  labour  market  is  less  than  half  of  the  men   (42%   compared   to   92%).   Globally,   the   female   participation   rate   is   about   52%.  Furthermore,   in   2008,   the   total   female   unemployment   rate  was   12%,  much   higher   than  that  of  men  (2%).  This  raises  issues  of  gender  inequality.   According  to  Moonen  and  Clark  (2013),  key  to  a  city’s  competitiveness   is   the  presence  of  renown   and   good  business   schools   as   studies   suggest   that  many   of   the   graduates   opt   to  remain  in  the  cities  in  which  they  graduated  due  to  the  contacts  they  establish  during  the  course   of   their   studies.   Furthermore,   renowned   business   schools   provide   a   learning  experience   that   is   truly   global   and   contemporary   due   to   investment   in   research,  collaborations   and   partnerships,   and   presence   of   international   faculty   and   students.   In  Dubai’s  Internet  City,  an  education  zone  was  established  in  2003  to  enable  co-­‐existence  and  collaboration   of   research   institutions   and   companies.   Dubai   has   attracted   a   number   of  schools,   ranked   in   the   top   100   Business   Schools   in   the   World   (Financial   Times   2014).  Among  these  schools  are:  London  Business  School  (ranked  top  in  2011  and  third  in  2014),  Hult   International   Business   School   (ranked   61st   in   2014   and  with   presence   in   six   other  global  cities).  In  terms  of  innovation,  Dubai  ranks  34th  in  the  world,  ahead  of  its  rival  Abu  Dhabi  but  still  with  the  need  to  improve  if  it  is  to  compete  with  global  leaders  in  education  and  innovation  -­‐  Boston,  London,  and  Paris  (2thinknow  consulting  2013)  . In  UAE,  public  education  is  free  for  all  nationals  until  the  university  level  and  education  is  compulsory  until  the  ninth  grade  (The  Library  of  Congress  2007).  Statistics  indicate  that  in  2005,  97%  of  female  and  94%  of  male  youth  in  UAE  were  literate  (UNICEF  2011).  However,  until   grade   six,   everyone   is   supposed   to   attend   gender-­‐segregated   schools.   Furthermore,  female  students  were  not  allowed  into  the  Zayid  University   in  Abu  Dhabi  and  Dubai  until  1998.   Morley   (2014,   p.   118)   argues   that   a   recurring   pattern   of   male   dominance   in   the  academic   field   and   underrepresentation   of   women   as   contributors   to   knowledge  generation  and  dissemination  is  evident   in  various  locations.  Dubai   is  no  exception,  as   its  religious  practices  have  served  to  establish  such  a  status  quo.   In  Dubai  and  all  the  emirates,  healthcare  is  provided  for  all  nationals.  The  health  situation  in  UAE  puts  special  attention  to  mothers  and  children  in  terms  of  promotion,  health  education  and  medical  facilities  (WHO  2014).  By  improving  governance  in  healthcare,  the  UAE  is  committed  to  provide  for  world  health-­‐class  services.  However,  to  reach  satisfactory  health  development  at  all  levels,  there  is  a  need  for  improved  policies  and  strategies.   Summary  of  Human  Capital

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Indicator Score Description

Population  growth (+) Abundance  of  cheap  migrant  labour  force

Working-­‐age  population (+) High  working  age  population-­‐  high  productivity,  but  less  representation  from  women

Entrepreneurship  and  risk-­‐taking  mind-­‐set

(+) High  access  to  new  technologies

Quality  of  education (-­‐) High  percentage  of  low-­‐skilled  labour Higher  education  system  is  of  low  quality  compared  to  cities  like  Boston,  London,  Paris High  percentage  of  women  in  higher  education

Quality  of  healthcare (+) High  ranked  globally  but  still  need  for  improvement.  According  to  PWC  (2014),  it  ranks  12th  in  the  world,  performing  better  than  all  American  cities.  

Hiring  of  Foreign  nationals (+) Diversity  and  competence  

  2.3  Financial  Maturity Astbury  Marsden,  a  leading  financial  services  recruitment  firm,  produced  a  report  in  2012  showcasing  the  preferred  city  to  work  in  investment  banking.  The  respondents  chose  New  York  (20%),  London  (19%),  Hong  Kong  (16%),  and  Dubai  (15%)  (Astbury  Marsden  2013).  While  the   leading  cities   in  West  have  been  characterised  by   low  wage  growth  and  higher  taxes  since   the   financial  crisis   in  2008,  Dubai  and  other  cities   from  Asia  have  established  themselves  as  lower  tax  hubs  (Moonen  and  Clark,  2013).  This  has  attracted  investments  to  emerging  cities  and  contributed  to  closing  the  gap  between  the  former  and  the  latter  in  the  global  cities  hierarchy.   Dubai  also  faces  competition  from  its  regional  rivals  like  Bahrain  and  Riyadh.    Nevertheless,  Dubai   is   determined   to   stay   ahead   of   its   regional   rivals.   The   establishment   of   Dubai  International  Financial  Centre  is  part  of  its  strategy  as  it  is  committed  to  building  a  highly  competitive  business  atmosphere  run  by  a  competent  multinational  and  multidisciplinary  team  consisting  of  members  from  as  far  as  the  UK  and  Hong  Kong  (Marchal  2005).  

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Astbury  Marsden  (2013)  also  predict  that  by  2022,  the  leading  global  financial  centre  will  either   be   London   or   one   of   the   Asian   cities   of   Singapore,   Hong   Kong,   and   Shanghai.  Although   the   possible   shift   of   influence   from   the   West   to   the   East,   Dubai’s   position   is  uncertain.  It  begs  to  ask  then:  What  does  Dubai  have  to  do  to  compete  favourably  with  the  Western   and  Asian   rivals?  To  begin  with,   the  presence  of   the  Dubai   financial   centre   free  zone   is   not   adequate,   as  Dubai   has   to   rethink   its   policies   in   order   to   attract  more   global  financial  service  providers  and  build  resilience  to  future  financial  crises.   Summary  of  Financial  Maturity  

Indicator Score Description

Breadth  and  depth  of  the  financial  cluster

(+) Strong  regional  performance  boosted  by  existence  of  the  financial  centre Reliable  capital  markets

2.4  Global  Appeal Dubai   boasts   of   five   times   more   foreign   owned   companies   (at   least   1300   companies   in  total)   than   any   other   country   in   the   Middle   East   (fDi   Intelligence   2013).   Dubai   is   also  attractive   to   the   rich   and   powerful   property   elite   and   global   high   net   worth   individuals  (HNWIs)  (Citi  Bank  and  Knight  Frank  2010;  Moonen  and  Clark  2013).  A  survey  of  almost  8,000  top  oil  and  gas  professionals  by  Rigzone  -­‐  a  petroleum  employment  and  data  clearing  company  indicates  that  Dubai  tops  the  list  of  cities  with  the  brightest  future  in  the  oil  and  gas   industry   (Rigzone   2013).   The   city   has   attracted   leading   global   petroleum   companies  and  many  expatriates.  Halliburton  has  its  global  headquarter  in  Dubai  while  Dragon  Oil  and  Wood   Group   have   also   established   their   presence   in   the   oil   and   gas   hub.   According   to  Moonen  and  Clark  (2013),  Dubai  has  utilised  the  oil  and  gas  industry  to  build  a  business-­‐friendly   and   economically   diversified   environment,   eventually   opening   up   new   markets  and  expanding  existing  ones  in  Africa,  Asia  and  the  Middle  East.   Dubai’s   image   is  attributed   to   low   tax  and  pro  business  philosophy.   It  has   the   lowest   tax  rate  globally  (PwC  2014).  One  part  of  the  strategy  is  the  formation  of  the  trade  free  zones.  Since  its  inception  in  1996,  the  Dubai  Airport  Free  Zone  has  been  the  fastest  growing  free  zone  in  the  Middle  East.   In  2010,   it  was  ranked  2nd  and  then  attained  the  top  position  in  2012  and  2013  according  to  the  fDi  Intelligence  ‘Global  Free  Zones  of  the  Future’  analysis  (Moonen  and  Clark  2013,  p.  157).  Dubai  has  also  witnessed  the  growth  of  other  free  zones  such   as   the   Dubai   International   Finance   Centre,   DuBiotech,   Media   City   and   Knowledge  

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Village,   all   with   the   favourable   transport   links   and   the   capacity   to   attract   foreign   direct  investments.   Secondly,  Dubai  has  set  out  to  become  a  regional  hub  for  commerce,  service  and  leisure  by  developing   these   free   zones   as   ‘cities   within   the   city’   (Pacione   2005).   Its   efforts   to   use  architecture  as  a  symbolic  gesture  to  market   itself  as  a  contemporary  progressive  society  have   resulted   in   one   of   the   most   powerful   and   spectacular   skylines   in   the   gulf   region.  Boasting  of  record  breaking  skyscrapers  such  as  the  Burj  Khalifa  (standing  at  892.8m,  the  tallest  building  in  the  world  upon  its  completion  in  2009),  it  is  ranked  5th  among  the  cities  with   the  most  dominant   skylines   in   the  world  by  Emporis  Skyline  Ranking,  based  on   the  density,   size   and   number   of   skyscrapers   (Moonen   and   Clark   2013).   The   architectural  masterpieces   have   improved   the   city’s   image   and   perhaps   boosted   its   tourism   potential  with  visitor  numbers   increasing  by  over  10%  per  year  (Moonen  and  Clark  2013;  Pacione  2005).     Summary  of  global  appeal

Indicator Score Description

Number  of  Fortune  500  companies (+) Presence  of  some  of  global  companies,  especially  in  the  oil,  real  estate  and  financial  sectors

Frequency  of  international  flights (+) Global  tourist  destination Emirates  airlines  is  emerging  as  a  competitive  brand  globally

Global  leadership  in  higher  education

(-­‐) Low  numbers  of  women   Low  research  output  and  innovation

Globally-­‐renown  think-­‐tanks (+) Evidence  of  collaborations  and  partnerships  with  global  universities  and  research  institutions  

Real  Estate  Market (+) Showing  growth  and  recovery  from  the  financial  crisis.  Its  sustainability  can  not  be  predicted  though

  2.5  Governance  and  Political  Structures

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There  is  evidence  that  in  cities  like  Dubai,  autocratic  governments  have  played  a  significant  role   in  building   infrastructure  necessary   for  making   them  more  competitive  at   the  global  stage   while   many   emerging   global   cities   with   more   democratised   mechanisms   and  evidence  of  citizenship  engagement,  such  as  Mexico  City  and  Rio  de  Janeiro,  have  struggled  to  formulate  policies  and  address  key  aspects  necessary  to  enhance  their  competitiveness  (Moonen  and  Clark  2013).  The  political   ideology   in  Dubai  strives   to  balance   the   forces  of  global  and  local  interests  (Pacione  2005).  The  top-­‐down  decision-­‐making  approach  can  be  viewed  as  a  hybrid  model   incorporating  both  state   control  and  economic   liberalism  with  the  sole  purpose  of  attracting  foreign  investments  by  promoting  free  enterprise. This   economic   strategy   is   being   implemented   through   urban   planning   and   development.  First,   the   authorities   established   free   zones,   as   earlier  mentioned,   and   then   put   in   place  policies   to  ensure   that   these  zones  operated  on  a  more   liberal  and  westernised  model  of  doing   business  while   the   rest   of   Dubai  was   subjected   to   the   traditional   sharia   law.   As   a  result,   the   Jebel  Ali   free  zone  opened   in  1985,  where  businesses  could  operate  outside  of  common   conditions   and   also  benefit   from  absence   of   taxes   and   low-­‐paid  workforce.   The  city’s   Internet   and   Media   cities   attracted   global   companies   such   as   Microsoft   and   CNN  because   they   were   promised   no   Internet   and   media   censorship   (Brook,   2013).  Nevertheless,  the  companies  can  not  entirely  exercise  freedom  of  speech  and  other  media  freedoms   since   some   content   which   is   considered   inconsistent   with   religious,   cultural,  moral   and   political   values   of   the   Emirates   is   blocked.   Therefore,   the   issue   of   intellectual  freedom  remains  a  challenge  for  many  media  companies  in  the  Dubai  autocracy.   Furthermore,   the  top-­‐down  approach  to  planning  does  not  promote  possibilities   for   local  democratic  participation,  as  there  is  a  tendency  to  serve  the  interests  of  the  ruling  wealth  families  and  protect  their  monopoly  (Marchal  2005).  On  the  contrary,  Singapore  and  Hong  Kong   have   strong   interactions   and   cooperation   between   departments   and   institutions.  Therefore,   their   business   environment   is  more   stable   than   the   one   in  Dubai   (Huriot   and  Lepage,  2006).  It  is  partly  for  this  reason  that  they  have  experienced  rapid  progression  to  global  city  status  while  Dubai  and  its  neighbour,  Abu  Dhabi,  are   just  showing  evidence  of  world  city  formation  (GaWC    2014).   When  it  comes  to  gender  equality   in  politics,   the  role  of  the  religion  and  local  culture  are  affecting  the  female  participation  in  decision-­‐making.  The  issues  of  gender  inequality  need  to  be  put  in  the  context  of  the  Islamic  society:            

The  role  of  Islam  in  this  process  is  important,  as  Islam  is  not  only  a  spiritual  religion  and  code,  but  is  also  the  basis  for  the  legal,  social,  and  moral  codes  of  behaviour  within  the  social  group.  (Kirdar  2006  in  Kirk  and  Napier  2009,  p.  306)

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The  UAE  agreed  in  2004  upon  the  resolutions  in  Convention  on  the  Elimination  of  all  Forms  of   Discrimination   against   Women   (CEDAW),   which   maintains   laws   and   practices,   equal  rights   and   legal   capacity   (UNICEF   2011).   The   legal   framework   allows   Emirati  women   to  divorce   only   when   certain   circumstances   occur.   The   framework   also   includes   women’s  right  of  inheritance,  children’s  protection  from  marriage  and  protection  from  gender-­‐based  violence.   The   main   national   organisation   promoting   women’s   rights   is   the   General  Women’s  Union,  which  has  developed  a  national  strategy   for   the  advancement  of  women  used  by  government   institutions.  A  department  for  protection  of  human  rights  have  been  established   in  Abu  Dhabi   and  Dubai   for  women  victims.  The  UAE  have  a   constitution   for  freedom  of  speech,  but  according  to  the  Library  of  Congress  (2007),  these  opportunities  of  human  rights  are  limited  or  totally  non-­‐existent  in  real  life.   Summary  of  governance  and  political  structures

Indicator Score Description

Electoral  process  and  pluralism (-­‐) None  existent  since  the  government  is  an  autocracy

Local  government  fiscal  autonomy

(-­‐) Low  transparency  and  accountability  in  government

Taxation (+) Low  taxation  rate  and  financial  free  zones Presence  of  consumer  protection  laws

Rule  of  Law (-­‐) There  is  room  for  improvement  if  it  is  to  compete  with  democratised  economies More  emphasis  on  media  freedoms

Government  effectiveness (+) Created  a  hybrid  model  merging  centralised  governance  and  economic  liberalism.  It  is  questionable  whether  this  is  effective  in  the  long  run

  2.6  Physical  Capital Lohmann,  et  al.  (2009)  discuss  two  factors  that  are  important  for  a  city  to  become  a  tourist  destination  hub.  The  place  needs  to  be  centrally  located  and  easily  accessible.  Accessibility  is   achieved   by   having   efficient   transport   and   telecommunication   infrastructure.   Several  factors  have  made  Dubai  into  a  major  international  tourist  destination,  among  which  is  its  well-­‐developed   infrastructure.   In  2014,  Dubai   received  4.8   visitors  per   resident,   up   from  

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4.2  visitors  per  resident  in  2009  and  received  over  10.9  billion  US  dollars  in  revenues  from  visitors,   placing   it   in   the   top   ten  global  destinations  of  2014   (Hedrick-­‐Wong  and  Choong  2014).   In  case  of  airline  network  development  the  government  have  been  taking  actions  such  as  long-­‐term  investments  and  formulating  development  strategies  to  ensure  global  air  travel  dominance.  Its  main  airport  provides  connections  to  over  180  global  destinations  with  air  travel.   It   benefits   from   its   proximity   to   regional   ports   and   from   the   fact   that   it   is  within  reach  to  major  global  cities  (Brooks,  2013).  The  Emirates,  Dubai’s  official  airline,  has  daily  flights   to  global  hubs   like  London,  Singapore,  and  Frankfurt   in  addition   to  an  established  market   in  Africa,   the  Gulf   region   and  Asia.  Dubai’s   seaport   is   also   among   the   best   in   the  world  (EIU,  2013)  -­‐  “with  the  lowest  lead  times  on  imports  and  exports  in  the  Middle  East”  (fDi  intelligence  2013,  p.  69).   Yet,  a  great  challenge  for  Dubai  is  to  provide  the  city  with  effective  transportation  systems  to   meet   the   demands   of   its   rapidly   expanding   urban   areas   (Pacione   2005).   In   terms   of  spatial   dimensions   of   global   cities,   there   is   a  move   towards  more   polycentric   structures  where  the  global  city-­‐region  as  a  whole  is  getting  more  important  as  opposed  to  having  a  single  clearly  defined  centre  (Marchal  2005).  Dubai  can  be  considered  as  a  conurbation  as  it   is   increasingly  merging  with  neighbouring  urban  settlements.  This  requires   investment  in  more  infrastructures  to  improve  commuter  rates  and  enable  fast  flows.   Summary  of  Physical  Capital

Indicator Score Description

Quality  of  road  network  in  the  city

(+) The  government  has  heavily  invested  in  infrastructure  using  oil  revenues  to  meet  the  increasing  demands  of  the  rapidly  growing  city  (Pacione  2005)

Quality  of  regional  or  international  links

(+) Major  tourist  destination  

Access  to  and  quality  of  seaports

(+) There  is  good  access

                  2.7  Environmental  Sustainability Urban   regions   are   known   for   their   extensive   use   of   natural   resources   and   generation   of  waste  products   (Al  Marashi  2010).  By   importing   loads  of  goods  and  exporting  additional  

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waste,  they  are  leaving  huge  ecological  footprints  not  only  in  the  immediate  environment,  but  also  in  distant  ones  for  a  long  time.  It  is  a  challenge  for  the  government  to  provide  for  a  system  that  could  handle  these  issues.   Dubai  is  a  car  dependent  city,  below  five  per  cent  of  all  personal  trips  are  made  by  public  transport   and   traffic   congestion   is   an   increasing   problem   (Pacione   2005).   Furthermore,  with   decreasing   oil   revenues   and   increasing   population,   there   is   a   rising   cost   social  infrastructure   and   utilities.   The   growing   construction   and   real   estate   sectors   which   are  huge  contributors  to  the  GDP  of  Dubai,  are  also  natural-­‐resource  demanding  activities  (Al  Marashi  2010).   To  cope  with  the  growing  city  challenges,  Dubai  needs  to  develop  sustainable  development  strategies.   The   non-­‐governmental   organisation,   Emirates   Environmental   Group   (EEG)  based   in   Dubai,   is   the  main   force   behind   education   in   sustainable   development,   dealing  with  issues  like  waste  management  and  public  transportation  (Al  Marashi  2010).  Its  goal  is  to  create  a  sustainable  urban  environment  with  help  from  the  United  Nations  Environment  Program  (UNEP)  and  the  United  Nations  Convention  to  Combat  Desertification. Regardless  of  the  efforts  by  EEG,  several  studies  suggest  that  Dubai  is  not  performing  well  when  it  comes  to  environmental  sustainability  (Moonen  and  Clark  2013).  As  a  coastal  city,  it   is   vulnerable   to   rising   sea   levels   due   to   climate   change.   It   is   also   experiences   extreme  desert   climate.   The   city   can   improve   in   this   area   by   developing   robust   sustainability  strategies  including  developing  a  recycling  culture,  harnessing  solar  energy,  and  investing  in  mass  transit  system  to  counter  increased  car  use.  It  should  also  capitalise  on  its  vibrant  economy   to   focus   on   innovation,   research,   and   technology   for   combating   the   effects   of  climate  change.   Summary  of  Environmental  Sustainability

Indicator Score Description

Risk  of  natural  disasters

(-­‐) Coastal  cities  are  affected  by  climate  change.  No  evidence  of  robust  strategies  to  combat  it

Environmental  governance

(-­‐) Need  improvement  of  development  strategies

Consumer  behaviour (-­‐) Car  dependence,  oil  industry  and  natural-­‐resource  demanding  activities

                                                                                                                                                          2.8  Social  and  Cultural  character

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The  city  has  also  benefited   from  the  social  and  cultural  diversity  due   to   its   large  scale  of  workforce  consisting  of  migrants  from  the  West,  the  Middle  East  and  Asia  (Marchal  2005).  The   liberal   economic   policy   and   flow   of   investment   capital   in   Dubai   has   attracted  immigrants,  which  had  a  strong  impact  on  the  socio-­‐cultural  character  of  the  city  (Pacione  2005).   This   heterogeneous   urban   character   not   only  manifests   itself   the   in   dressing   and  language,  but  also  in  the  increasing  popularity  of  various  sports.   Dubai  is  the  best  sports  city  in  the  Middle  East  and  Africa  and  is  ranked  14th  in  the  world,  considering  the  quality  of  sports  facilities,  transportation,  accommodation,  security,  degree  of  public  interest  in  sports,  and  the  use  of  social  media  (Moonen  and  Clark  2013).  The  city  has   expressed   interest   in  developing   target   strategies   for  popular   global   sports.   In  1996,  the   Dubai   World   Cup   whose   venue   cost   $1.25   billion   was   inaugurated,   becoming   the  world’s  richest  horse  racing  event  (Smith  2014).  Since  then,  numerous  prestigious  events  have  been  hosted  by  the  city.     The  rapid  changes  in  Dubai  have  created  social  polarisation.  Apart  from  the  fact  that  access  to   social   and   cultural   activities   is   not   equally   distributed   across   gender,   there   is   an  increasing  gap  between  the  rich  and  poor  in  social,  economic  and  spatial  terms.  A  problem,  which  was  mainly   associated  with   the   living  and  working   conditions  of  migrant  workers  has   spread   to   the   locals   as  graduates  are   struggling   to   find  employment   (Marchal  2005).  Incidents  of  racial  segregation  have  also  been  identified. In  terms  of  security  and  crime  prevention,  Dubai  has  continued  to  economically  thrive  in  a  region  characterised  by  conflicts  and  war.  It  has  a  low  crime  rate,  ranking  fourth  globally,  after  Hong  Kong,  Singapore  and  Tokyo,  outscoring  all  US  cities  and  London  (PwC  2014).  At  the  global  stage,  history  also  suggests  that  Dubai  has  played  a  pivotal  role  in  global  hostage  negotiations  as  many  hijacked  planes  have   landed  in  the  city   for  refuelling  (Brook  2013).  However,   the   city   has   also   been   linked   to   transnational   crime   (Haken   2011).   Numerous  fearsome  groups  have  also  used  its  banks  for  money  flows  and  funding  and  also  travelled  through   its   airport   enroute   to   their   missions.   (Brook   2013).   The   Library   of   Congress  alludes   to   the   fact   that,   “trafficking   in  women  and  girls,  used  as  prostitutes  and  domestic  servants,  and  in  men,  used  as  servants,  labourers,  and  unskilled  workers,  continues  despite  government  pledges  to  end  these  practices”  (2007,  p.  27).  

Summary  of  Social  and  Cultural  Character

Indicator Score Description

Freedom  of  expression  and  human  rights

(-­‐) Constitutes  freedom  in  theory,  limited  in  practise

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Openness  and  diversity (-­‐) Evidence  of  diversity  due  to  presence  of  various  nationalities  but  Gender  inequalities  and  social  polarization  are  present.  

Presence  of  crime  in  the  society (+) Low  crime  rate  but  there  is  need  to  tackle  transnational  crime.  

Cultural  vibrancy (+) Positive  cultural  impacts  of  immigration  and  the  growing  popularity  of  global  sports

 

3.0  Conclusion  -­‐  What  areas  should  Dubai  improve  upon?       This  study  has  showed  that  it  takes  more  than  just  good  economic  performance  for  a  city  to  compete  favourably  at  the  global  stage.  Issues  like  governance,  health,  security  and  safety,  and  environmental  sustainability  also  play  part.   It   is  with  such  a  holistic  outlook  on  what  makes  a  city  competitive  that  we  have  assessed  the  success  factors  and  limitations  of  Dubai  as  an  emerging  global  city.   The   study   has   also   identified   that  Dubai   is   a   regional   leader   in   almost   all   the   categories  discussed  but  the  gap  between  it  and  leading  global  leaders  is  still  wide,  especially  in  areas  of   environmental   sustainability,   social   and   cultural   character,   education   and   innovation,  and  governance. Realising   that   the   finite   oil   resources   will   soon   be   depleted   and   preparing   for   it   is   one  aspect  reflecting  Dubai’s  visionary  approach   to   the  challenges  before   it.  But   the  economy  needs  to  become  more  diversified  for  the  city  to  stop  heavily  depending  on  the  decreasing  oil  revenues.  The  increasing  political   instability  within  the  region  poses  another  threat  to  its   competitiveness,   in   addition   to   the   suppression   of  media   freedoms.   Although   it   has   a  high  working   age   population,  which  means   high   productivity   of  workforce,   Dubai   has   to  deal  with  the  social  polarisation  characteristic  of  many  capitalist  cities,  as  the  gap  between  the   rich   and   the   poor   is   ever   growing.   There   is   need   for  more  women   in   the   education  system   and   labour  market   to   tackle   gender   inequality.   Perhaps   this   can   be   achieved   by  embracing  more  liberal  and  more  inclusive  religious  and  institutional  structures.  

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4.0  Reference  list

4.1  Literature  sources   Al  Marashi,  H.  (2010).  Encouraging  sustainable  urban  development  in  the  United  Arab  Emirates. Citi  Bank  and  Knight  Frank  (2010)  Wealth  Report  2010,  p.  35-­‐37.   Davis,  M.  (2006)  “Fear  and  Money  in  Dubai”.  New  Left  Review.  Volume  41,  pp.  47-­‐68.   EIU  (2013).  The  Economist  Intelligence  Unit.  Hot  spots  2025:  Benchmarking  the  future  competitiveness  of  cities.  London:  The  Economist  Intelligence  Unit. Haken,  J.  (2011)  Transnational  Crime  In  The  Developing  World.  Washington,  DC:  Centre  for  International  Policy.   Hedrick-­‐Wong,  Y.  and  Choong,  D.  (2014)  MasterCard  Global  Destination  Cities  Index.  MasterCard  worldwide  Insights.   Huriot,  J.-­‐M.  and  Lepage,  L.  (2006)  Megacities  Vs  Global  Cities:  development  and  Institutions.  ERSA  Conference  Papers. IPCC,  Intergovernmental  panel  on  climate  change  (2014)  Summary  for  Policymakers In:  Climate  Change  2014,  Mitigation  of  Climate  Change.  Contribution  of  Working  Group  III  to  the  Fifth  Assessment  Report  of  the  Intergovernmental  Panel  on  Climate  Change.  New  York:  Cambridge  University  Press.                 Kirdar,  S.  (2006).  The  development  of  women’s  education  in  the  Arab  world.  In:  R.  Griffin(Ed.),  Education  in  the  Muslim  world:  Different  perspectives  (pp.  191–210).  Oxford:  Symposium  Books.   Kirk,  D.,  &  Napier,  D.  (2009).  Issues  of  gender,  equality,  education,  and  national  development  in  the  United  Arab  Emirates.  International  Perspectives  on  Education  and  Society,  10,  301-­‐331. Lohmann,  G.,  Albers,  S.,  Koch,  B.,  &  Pavlovich,  K.  (2009).  From  hub  to  tourist  destination–An  explorative  study  of  Singapore  and  Dubai's  aviation-­‐based  transformation.  Journal  of  Air  Transport  Management,  15(5),  205-­‐211. Marchal,  R.  (2005).  Dubai:  global  city  and  transnational  hub.  Transnational  connections  and  the  Arab  Gulf,  16,  93-­‐109. McCann,  P.  &  Acs,  Z.  (2011)  Globalization:  Countries,  Cities,  and  Multinationals.  In  Regional  Studies.  pp.  1-­‐16.

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                                                                                                                                                                        Moonen,  T.  and  Clark,  G.  (2013)  The  Business  of  Cities  2013:  What  do  150  city  indexes  and  benchmarking  studies  tell  us  about  the  urban  world  in  2013?  London:  Jones  Lang  LaSalle. Morley,  L.  (2014).  Lost  leaders:  women  in  the  global  academy.  Higher  Education  Research  &  Development,  33(1),  pp.  114-­‐128.   Pacione,  M.  (2005).  Dubai.  Cities,  22(3),  pp.  255-­‐265. Taylor,  P.,  et  al.  (2011)  Global  Urban  Analysis:  A  Survey  of  Cities  in  Globalization.  London:  Earthscan.   Taylor,  P.  (2004)  World  city  networks:  a  global  urban  analysis.  Routledge:  New  York.   4.2  Internet  sources 2thinknow  consulting  (2013)  Innovation  Cities  Indexes  2012-­‐2013  Launch.  [Online]  Available  at:  http://www.2thinknow.com/reference/media-­‐release-­‐innovation-­‐cities-­‐indexes-­‐2012-­‐13-­‐launch/  [Accessed  03  January  2015]. Astbury  Marsden  (2013)  Singapore  -­‐  preferred  location.  [Online]  Available  at:  http://www.astburymarsden.com/our-­‐thinking/article/0/singapore-­‐preferred-­‐location/  [Accessed  06  January  2015].   Brook  ,  D  .  (2013)  How  Dubai  Became  Dubai.[Online]  Available  at:  http://nextcity.org/daily/entry/how-­‐dubai-­‐became-­‐dubai  [Accessed  03  January  2015]   fDi  Intelligence  (2013)  Middle  East  Cities  of  the  Future.  [Online]  Available  at:  http://www.tel-­‐aviv.gov.il/TheCity/Documents/Middle%20East%20Cities%20of%20the%20Future.pdf  [Accessed  03  January  2015].   Financial  Times  (2014)  Global  MBA  Ranking  2014.  [Online]  Available  at:  http://rankings.ft.com/exportranking/global-­‐mba-­‐ranking-­‐2014/pdf  [Accessed  06  January  2015] GaWC.  (2014).  GaWC  Network  Research.[Online]  Available  at:  http://www.lboro.ac.uk/gawc  [Accessed  08  January  2015] Jaramillo,  A.  (2013).  Reforms  needed  in  higher  education  to  meet  the  needs  of  youth  in  the  Middle  East  and  North  Africa.  [Online]  Retrieved  April  5,  2013,  from  http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/MENAEXT/0,,contentMDK:23028342∼pagePK:14  6736∼piPK:146830∼theSitePK:256299,00.htmlAccessed

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The  Library  of  Congress  (2007).  Country  Profile:  United  Arab  Emirates,  July  2007.  [Online]  Available  at  http://lcweb2.loc.gov/frd/cs/profiles/UAE.pdf  [Accessed  08  January  2015]   PwC  (2014)  Cities  of  Opportunity,  2014:  Dubai.  [Online]  Available  at:  http://www.pwc.com/m1/en/publications/dubaicoo.pdf  [Accessed  03  January  2015] Rigzone  (2013)  Oil  and  Gas  Cities.  [Online]  Available  at:  http://www.rigzone.com/news/oil_gas/a/126250/Rigzone_Ranks_the_Top_10_Oil_Gas_Cities_in_the_World  [Accessed  03  January  2015] UNICEF  (2011).  UNITED  ARAB  EMIRATES  Mena  Gender  Profile  Status  of  Girls  and  Women  in  the Middle  East  and  North  Africa.  [Online]  Available  at:  http://www.unicef.org/gender/files/UAE-­‐Gender-­‐Eqaulity-­‐Profile-­‐2011.pdf  [Accessed  08  January  2015] WHO  (2014).  United  Arab  Emirates  -­‐  World  Health  Organization.  [Online]  Available  at:  http://www.who.int/countryfocus/cooperation_strategy/ccsbrief_are_en.pdf    [Accessed  08  January  2015]

World  Economic  Forum  (2014).  Global  Gender  Gap  Index  2014.  [Online]  Available  at:  http://reports.weforum.org/global-­‐gender-­‐gap-­‐report-­‐2014/rankings/    [Accessed  08  January  2015]

Haryopratomo  et  al.  (2011).  The  Dubai  Tourism  Cluster.  [Online]  Available  at:  http://www.isc.hbs.edu/resources/courses/moc-­‐course-­‐at-­‐harvard/Documents/pdf/student-­‐projects/UAE_%28Dubai%29_Tourism_2011.pdf  [Accessed  09  January  2015]