The Department of Economic Development (DED) in Dubai launched today ‘DEDTalks,’ a knowledge exchange platform for thought leaders and decision-makers from the public and private sectors to meet regularly and share experiences, ideas, analyses and best practices relating to the economy and doing business.
DEDTalks is the latest initiative from DED for continued engagement with the private sector, as it pursues a broad economic agenda centred around productivity, sustainability, innovation and regulatory efficiency and coherence throughout 2016, and beyond.
DEDTalks 1, the first in the series, brought together industry leaders, diplomats, senior government executives and high level officials from the International Monetary Fund (IMF) to discuss the historic experiences and empirical analyses of how different economies managed to spur long-term growth. The forum also witnessed DED presenting a new IMF book, Breaking the Oil Spell: The Gulf Falcons’ Path to Diversification.
“This event has been organised in the wake of the call by His Highness Sheikh Mohammed bin Rashid Al Maktoum, UAE Vice President and Prime Minister and Ruler of Dubai, to launch appropriate initiatives and programmes to steer the UAE economy away from dependence on oil revenues, and towards a diversified and sustainable knowledge-based economy,” His Excellency Sami Al Qamzi, Director-General of DED, said in his welcome address.
Al Qamzi added that diversification and sustainability have remained the focal points of Dubai’s growth strategy for more than three decades now. Oil and gas, which in the eighties accounted for up to 55% of the emirate’s GDP, contributes less than two per cent today, while the trade, real estate, logistics and financial sectors constitute the pillars of Dubai economy.
“The latest GDP figures indicate diversity driving a qualitative and quantitative transition of the economy towards increased productivity across various sectors in Dubai, a transformation that has taken place within a short period of time. Policymaking in Dubai is focusing on accelerating diversification and transforming Dubai into a green economy, the smartest city in the world, and the global capital of Islamic Finance,” Al Qamzi said.
The UAE’s success in investing its oil proceeds to achieve diversification and an unprecedented economic and social transformation was also highlighted at the event. Dubai’s experience in making visionary investments in infrastructure, hard and soft, building on its heritage as a trading hub was emphasised by experts who encouraged to Dubai to stay the course of diversification through continuous improvements in the business environment and attracting foreign direct investment.
“The UAE has used its oil wealth to modernise infrastructure, create employment, and improve social indicators, while simultaneously accumulating official reserves, maintaining relatively low external debt, and remaining an important donor to poor countries. Real economic growth in the country has averaged five per cent a year during the past decade and a half, while non-oil economic activities have grown steadily. In the next 15 years, the share of non-oil sectors to GDP will increase to 80%, up from 70% today” remarked Raed Safadi, Chief Economic Advisor to DED.
“According to The Diversification Tracker, an index that focuses on three economic aspects –export complexity, the share of the non-oil sector, and private versus public sector spending, the UAE comes first in the GCC with a score of 57%, which is close to the global average (58%) and also similar to Brazil and Canada. The UAE score is ahead of Australia and Russia’s,” said Safadi.
Dr. Oussama Kanaan, Director of the Middle East Centre for Economics and Finance (CEF), at IMF, indicated that the CEF has been leading, jointly with the Arab Fund for Economic and Social Development in Kuwait, symposia aimed at stimulating discussion on economic policies for GCC countries to ensure sustainable development. He added that bold diversification strategies have become particularly relevant in the face of low oil prices, and critical to preventing any decline in living standards across the GCC.
Leading IMF experts on economic diversification, Dr. Reda Cherif and Dr. Fuad Hasanov, called on GCC oil exporters to draw from the diversification models of Brazil, Korea, Malaysia, and Singapore. The experiences of these countries reveal that standard growth policy prescriptions may not be sufficient, and that incentives for firms and workers need to be realigned to develop technologically sophisticated and export-oriented industries.
The IMF experts also suggested that successful strategies combine vertical diversification (in specific sectors) to create linkages in existing industries, and horizontal diversification (across sectors) beyond the comparative advantage, with an emphasis on exports and technology upgrading. Changing incentives for firms to promote exports and for workers to develop skills needed for those sectors is critical to achieving diversification and so is facilitating entrepreneurship as well as investing in education and social development, said the experts.