The construction industry boomed due to the ease of acquiring loans and guarantees for the citizens. All types of buildings with numerous styles appeared, with the loss of the cultural architecture identity. People abandoned the countryside and migrated to cities in an effort to achieve a stable monthly income and better living conditions.
As a commodity it was very scares and remains in high demand; always securing economic income- from the oil sector. It is more of a need for nations to purchase oil as it is required for their economic purpose.
4.1 shift from sector:
Dubai was heavily dependant on in the late 1960’s and 1970’s gave extensive wealth creation and is the backbone of the Dubai’s economy. This was a primary source of trade and revenue. The oil industry is controlled by the government and they have established that oil will run out in the next 20 years, between 2020 and 2025 there will be no oil reserves in Dubai. Previously half of the GDP contribution was from oil reserves; currently it contributes only by 3%, estimated at $163 in 2006. By 2010 Dubai aims to have 0% oil contribution to the GDP.
With the recognition that oil reserves will be exhausted, the late ruler HH Sheikh Rashid bin Saeed Al Maktoum, who ensured that Dubai's oil revenues, despite being relatively modest by the standards of the region, were deployed to maximum effect. This was further continued by his son, Sheikh Hamdan bin Rashid Al Maktoum.
Industries which Dubai has diversifies into is the information industry with the opening of Dubai internet city in 2010 costing $250m and development of the Dubai Media City which opened in 2001 and is now home to branches of CNN, Reuters and Dow Jones, among others.
5. Shift to Tourism:
But with the given natural landscape of the white sandy beaches and amazing sand dunes; traditional Arab hospitality; delightful winter climate; crime-free environment the financial backup for the extravagant and extraordinary investment and development of hotels and attractions- has created an ideal atmosphere, for Dubai to developed extensively its tourism industry.
Tourism has further developed and is a lucrative option due to the increase in disposable income, with more people taking holidays and the greater accessibility. Dubai has its own airline, Emirates launched in 1985 and facilities provided from the Dubai International Airport which had 260,000 flights in 2007.
5.1 Nature of Tourism:
All this has created mass tourism for the general public who can now get cheap package deals and also a stop-over destination for further a field destination. Dubai not only attracts the mass tourist market it also has a niche market for the rich and famous, with the development of the palm island – the Beckman have bought the island of UK. Dubai has also become the much sough sought after venue for conferences, regional and international exhibitions and major sports events such as the Dubai World Cup.
5.2 Tourism trends:
The growth of tourism has been immense; it is expected to over take oil exports as an important source of revenue in the near future. tourism industry accounts for a steadily increasing percentage of the GDP, with the combined tourism and retail sector in contributes to more than 20 per cent of the GDP Tourism currently accommodates 7 million tourist a year and it is predicted to reach 15 million by 2010. Dubai’s airport logged 24.7 million passengers in 2005, a 14% increase from 2004.
5.3 Tourism Development:
There has been a change in the tourism development, today there is the need for innovative, extravagant and exuberant attractions to be considered as the tourist leader. This has been possible for Dubai due to its financial backing from the oil sector laying the foundations, but tourism being the future. The Sheikh is well committed and the master-mind in making Dubai world leader as he demonstrated in his quotes:
‘We want to become number 1; no-one cares about number 2’
‘I have only completed 1/10th of my strategic plan’
Also tourism in Dubai is an important part of the Dubai’s government's strategy to maintain the flow of foreign dollars into the emirate.
Innovative Developments which have already been created include the seven star hotel – Burj Al Arab, built on an artificial island in 1999; the luxurious Jumeirah Emirates towers in 2000; the Ski-Dome opened in 2006, an indoor skiing slope and the mall of emirates, the largest shopping center in the middle east- creating another reason to visit Dubai. This has also been promoted by the Dubai Shopping Festival.
Other developments are under construction such as the world and the palm island which are a series of artificial islands; homing luxury hotels, apartments and villas. The Dubai land to be completed in 2016 is expected to be the largest theme park in the world and finally the Burj Dubai projected to be completed by end of 2008 is the worlds tallest building.
These are just some of the examples of the extravagant investment into attraction to develop tourism furthermore.
6. Sustainable development:
With this current shift towards tourism and tourism playing such an imperative role in Dubai’s economy, the question is that: is the shift sustainable?
Sustainability definition is meeting today's needs of development without compromising future generations' ability to develop. Sustainability can be looked at from three perspectives:
- Economical
- Environmental
- Socio-political
In order to be fully sustainable for the future, all three elements have to be considered. Tourism in Dubai has been developed, now what needs to be evaluated is how it affecting sustainable development for the future by fulfilling these criteria. In order for tourism to have a long-term impact, tourism’s impact has to be considered today to dictate the future of this industry.
6.1 Economic Sustainability:
Economic sustainability is achieving economic growth year on year. Development of tourism has created a second source of income for the GDP contribution. Unlike the oil reserves this is not a finite resource and can be very economically sustainable if it keeps generating wealth, which can be reinvested to create more income.
Tourism has continued and developed the wealth creation cycle which was established by the oil sector. This continued wealth creation has created more improved infrastructure such as the development of a third terminal at the Dubai’s international Airport. This has also created state of the art facilities for the locals of the country which are linked to tourism such as the Dubai mall which the biggest shopping center.
Tourism has been developed in such a way in Dubai that it creates all year round income, so maintain the healthy economic prospect. During the winters the pleasant climate is ideal for out-door activities such as the sand-dune parks and Wild Wadi Water park. But during the unbearable temperature of the summer, many in-door attractions have been provided such as the ski-dome and the shopping mall all with cooled temperatures due to the Air-Conditioning.
Transport systems are being improved due to the influx of tourist, currently there are 90 million buses operating on 69 routes. Currently the metro system is being developed which will open partially in 2009 and fully in 2012. This is another example of the economic sustainability as it is improving the infrastructure for the future.
The industry provides nearly 12 percent of total employment in the country, or nearly 300,000 people, and jobs in this sector are expected to increase to over 375,000 by 2016. The Mall of Arabia alone can support 10,000 employees. This has in turn meant that unemployment figures are very low at only 5%.
However with all these economical development it is not fully economically sustainable as it is increasing inflation in Dubai. This has increased the cost of living and as result in rents doubling in commercial and rental properties.
6.2 Environmental Sustainability:
Environmental sustainability is the ability of the environment to continue to function properly indefinably. Dubai has a wide array of biodiversity with extensive flora and fauna. Established environmental initiatives exist, such as the environmental tourism task force and Ras Al Khor wildlife sanctuary protective environmental legislation. They promote and educate environmentally friendly activities which are designed to aid the preservation of precious landscapes such as the dunes and the wild grass and date trees they incur and animals such the wild birds and Arabian Oryx. But the mass tourism that Dubai attracts has impacts on environmental factors.
With the increase level of development at such fast rate this is causing land to be constrained and the development of this new project is eating into the wild fauna and flora on the outskirts of Dubai on land and sea.
The palm islands are highly disruptive to the ecosystem it is disturbing fishing and shipping due to the restriction of waves and disturbing the migrating birds. The palm islands have developed algae within the construction and there is foul smell due to the wall on circumference of the island limiting fresh water supply coming into the island. The development of the off-shore islands such as the palm and the world requires massive quantities of dredging and fills operation. This in turn is putting pressure on the availability of soil. Currently since the world creation has been hauled due to the lack of soil supply. Another problem faced by these dredging operations is that the islands that have been created have been washed away by large waves and therefore requiring furthermore soil.
This dredging is destroying the marine ecosystem especially the Corel reefs and many marine animals are damaged or die during the construction of these islands.
One of the popular tourist attractions is off-shore vehicle driving in the dunes along with camping and picnicking is effecting the environment by the littering and erosion of the land. Also the wildlife established there is scared off and in future not sustain.
With the increase development of resorts and hotel facilities for the tourist this is putting immense pressure on the critical water supply, which may cause future difficulties not just the tourist industry but the locals too. Larger quantities of waste will have to be dealt with and landscapes are altering drastically with the urban development of buildings.
With the increase in the population and level of tourism traffic is dreadful and has also increased the level of pollution.
Environmental factor is important for Dubai as the assistance of the environment allows tourism to flourish. However if the environment is not considered, as it is in the current situation, it will gradually degrade to the point it is not acceptable and tourist will not want to visit therefore impacting the sustainability of tourism.
6.3 Socio-Political Sustainability:
Socio-Political Sustainability is using the government policies to marinating social capital and developmental policies. The current government policies are west friendly which influences the sustainability of tourism to attract the tourists. Partnership in the public and private sector has encouraged foreign investment. This is evidential where international companies such as Hilton developing hotel chain such as the ‘Hilton Dubai Creek hotel’. Tourists are provided with state of the art facilities with are up to the international standard. These international firms also help raise the general luxury standard of local Dubai developments.
The current political scenario has the Sheikdom Rule! They dominate the decisions being taken and direct future growth. Although there were federal national council election there is limited democracy and limited say of the citizen. But this may be to change in the future, as the new immigrants settling in Dubai due to their jobs being related to the tourist sector; they are more likely to voice their opinions especially on the increased level of living but decreasing standard of life, in terms of traffic and pollution. Dubai has gained world awareness and a reputation, not only from tourist but the linkage of the sports tourism putting Dubai in international arena. The tourist industry also highlights the culture of the country and makes their practices more known.
The citizens as a whole have become wealthier and the entrepreneurial activity is increasing. Citizens are also taking advantage of the facilities which are provided for the tourist. For example the Wild Wadi has a huge national visitors and special ladies-only session during the evenings. With the more liberal and open nature adopted for the tourist, freedom of women has occurred with the sheikh stating that women should also benefit from the developments. Education facilities are intended to improve with recently $10bn spent on education, so that Dubai in the future is able to deal with the new economic situation and develop it further. Although lifestyle has increased generally it has reduced in terms of the traffic and chaos for locals as well as increased pollution.
For the major structures being built for tourist purposes large amount of immigrants are coming to Dubai. This has increased dramatically with 80% population being immigrants and only 180,000 locals. Predication for 2020 suggests that there will be less than 1% indigenous people living in Dubai. These migrants are vast and essential and come in two forms: the high skilled labour mainly from the west – such as the CEO and engineers to oversee the project and the low skilled labour, mainly from South-East Asian countries and Indonesia. These workers are required for construction of the sites. However the treatment of these labour forces is poor. They do not get paid for months; they live in inhuman conditions, work excessive hours and when this low skilled labour protest they are either imprisoned or deported back to their country, so majority just accept the situation.
With the vast amount of the immigrant and the west friend policies being adopted there is a risk of lost of identity and the old culture is overshadowed. There is always the difficult balance to be achieved between Islamic values and lifestyles of the liberal west, for example the acceptance of reveling clothing for women and drinking alcohol. In order for tourism to exceed these things have to be accepted but at the expense of the nations Islamic values.
Prostitution has increased with tourism, and Dubai holidays known for the neighboring Arabs as ‘dirty weekends’ – prostitutes are mainly from Russia and Ethiopian affecting the socio-political factors.
Compared to the rest of the middle- east region Dubai is considered a secure and stable location. However with the current political climate of ‘war on terror’ this has impacted this region a lot but currently not Dubai directly. If there is a war outbreak against Iraq this will have impact on Dubai tourism industry. The closeness of the countries, may hesitate the tourists and they may avoid coming to that region altogether, looking for other holiday destinations. Also the fact that there are so many expatiates, 10000 British workers may return to their country due to security issues. If these workers hold key positions in hotels or attraction, there would be no-one to replace them.
7. Conclusion:
To conclude, the question asks is the shift from oil to tourism sustainable. On the basis of creating a dependency on an infinite resource means that tourism is more sustainable than oil. Although the oil industry set the foundations for the tourism industry, it is the tourism industry which is sustainable for Dubai. On economical basis it creates a second form of revenue generation which is taking over the oil sector contribution to the GDP of Dubai. As long as the tourist keep coming this will create a continue cycle of wealth creation which will be reinvested in further developments and infrastructure/facilities for Dubai. Standard of living has improved; social- political system has been affected indirectly by tourism as immigration increase has led to educational, women right and political awareness. But on the other side social factors are being affected for too much accommodation and loss of culture along with other elements of standard of living decreasing. Environmental factors are mostly neglected. These sustainable issue were not created by the oil sector, apart from wealth creation. But the oil factor did not bring the less sustainable factors of socio-political. However the impact on environment was affected differently to both areas.
The main reason that tourism sector is more economically sustainable than oil is due to the infinite nature. However there is something else to consider. Although tourism may be long-term industry especially with the increased culture of travelling this is not completely sustainable. Issues have been raised in previous arguments about environmental issues and increase living cost and loss of identity due to tourism. But all these factors are in the hands of the Sheik to sort out. If appropriate steps are taken to sustain these factors generally tourism will be fully sustainable and sustain the strategic plan.
But the other factors which are out of the Sheiks control are socio-political factor of war. Although Dubai would not like this incident, but if it was to occur it would not be able to influence it. And the consequences will follow as outlined leading to a decline in tourism impacting its sustainability.
Another factor out of the sheiks control is the influence of tourism if global recession occurred. During these situation first things people cut back on is the extra, luxury spending which would be holidays to Dubai. So if tourists are not going to come to the country it sill impact the sustainability of the tourism industry, with decreased spending resulting in negative ways for the locals.
But in comparison if we take in consideration the oil sector although a finite resource with now only a life time of 20years, previously it provided Dubai with great economic gains and means for further development. But where oil sector differs is the nature of this commodity. Oil is necessary for world economy, its use in industries, businesses and general people use makes it very essential need, till the development of renewable sources (research which has only occurred due to awareness of oil limitation) no matter what the global climate or scenario everyone would have been willing to buy the oil of Dubai, even recently with ridiculous price of oil passing $100 per barrel, it is being bought because it is required. Oil sector is less prone to uncontrollable factors but the biggest downfall is the finite nature the reason for the diversification of the Sheiks to the tourism sector.
My theory of sustainability for Dubai will be firstly diverse in many sectors which are not very interrelated. Dubai has created the hub for internet city and media city which is a good start. It is also considering going into the financial market – but there are still doubts on the transparency of regulation given the Sheikhdom rule. But the fact of major diversification is good factor. But personally I would not use up all the oil and gas reserves, I would keep a certain percentage, so if uncontrollable factors were to occur such as war and economic downturn at least Dubai has a resource which it can still sell to gain some form of suitability.