Why the explosive commecial growth in Dubai, UAE, Bahrain, etc..?

In the last decade or so we have seen massive commercial growth and development in the Persian Gulf. Why now? What was the spark? Surely they had massive oil revenue prior, no?

Remember that the United Arab Emirates (of which Dubai is a part, btw) didn’t become a country until the early 1970’s. The very noticeable construction boom they’re going through now is partly due to their burgeoning tourist industry, which in turn was stimulated by the growing oil wealth of neighboring countries, etc. I think what we’re seeing now is more an increasing cascade of economic growth and development than a sudden boom out of nowhere.

Your tax dollars at work.

One word: taxes (and NOT your tax dollars at work, but the lack of taxes in Dubai).

Dubai made a deliberate decision in the late 90s (1997 IIRC) to become a tax-friendly, pro-growth country. The money and growth doesn’t start immediately (especially with an Arab country in a remote location) but once the country establishes a solid track record of being pro-growth (for both businesses and individuals), the money starts pouring in.

Ah, ok, so it’s Monaco in the desert, is it?

Makes sense…

Dubai and Bahrain got big for quite a few reasons.
They are both the #1 tourist spot for the Saudis and they are also big tourist spots for Northern Europeans every winter. The society is very Western and can be a lot of fun.

Bahrain is big in banking of all sorts but isn’t really taking-off the way Dubai has.
Dubai got big and is getting bigger because of just what pilot141 said. They made a serious effort and a conscious decision to make the Emirates as “business friendly” as possible. Hundreds of companies have their Middle Eastern headquarters in the Emirates because they don’'t want to live in Saudi. They allow people to register “off-shore” companies. Low-to-no taxes. Cheap labor from India.


The German economy got a huge boost when American troops were stationed in Europe after WWII. The Japanese economy got a huge boost when American troops were stationed in Eastern Asia during the fifties and sixties. Now we’ve got a big military presense in the Middle East and the Gulf states are feeling the economic bump. There’s a big economic benefit to having an American army in the country next door.

Some of the smaller Gulf states don’t have very much left in their oil reserves and have to plan for a way to run their economies once their oil is gone.

I believe Dubai expects to run out of oil within (I think )eight years so that they are deliberately reinventing themselves as a tourist resort and spending the oil revenues to achieve this while they still have some.

I doubt that the American troops account for very much of the economic growth happening in the UAE, since a lot of the development is aimed at those much wealthier than the typical American soldier.