Today, Dubai is renowned for its financial hub, tax-free business zones, extraordinary landmarks, and the world’s busiest international airport. In 1960, Dubai had no financial hub, no skyscrapers, and was not much more than a town reliant on fishing and pearling. The case study of Dubai remains unique and intriguing, as the emirate engineered prosperity in a single generation. How did Dubai, without a substantial foundation, propel itself to become a remarkable economic engine? While oil revenue provided a spark, it was Dubai’s unique blend of economic diversification, visionary policy, openness to foreigners, and vivid urban planning that turned it into the most populous city in the United Arab Emirates.
Although Dubai never had the oil reserves of Abu Dhabi or Saudi Arabia, 60 years later, it is clear that oil revenue certainly sparked Dubai’s evolution. In the 1990s, oil accounted for less than 10% of GDP. Yet, Dubai’s awareness that oil was finite was a turning point in visionary policy. This recognition by the leadership of Sheikh Rashid bin Saeed al Maktoum encapsulated the economic paradox of resource-led growth, as finite resources such as oil pose a significant risk. I believe such foresight fuelled Dubai’s vision for diversification into modern transportation, commercial hubs and infrastructure. Yet, the question of how Dubai was able to transform its oil industry so rapidly remains. Rather than depending on hydrocarbons such as petroleum and natural gas, Sheikh Rashid saw oil revenue as start-up capital for wider economic transformation. Dubai essentially used its small oil reserves wisely, investing them into vast infrastructure projects, such as the widening of the infamous Dubai Creek. The nucleus of Dubai’s early commercial life was its creek, a harbour that enabled exchange. It functioned as both a resource base and a trade pathway, ensuring Dubai’s survival and prosperity. While the creek had long served as Dubai’s commercial lifeline, its modernisation in the late 1950s, funded by initial oil revenue, authenticated the policy aim of reinvesting and diversifying. The collapse of the pearling industry in the 1930s, precipitated by the global depression and the emergence of Japanese cultured pearl, also underscored the inherent risks of mono-sector dependence and therefore catalysed a strategic imperative to diversify and expand the creek further. Thus, Dubai had established a blueprint for a post-oil economy through reinvestments. The emirate successfully promoted efficiency and diversification from foundational oil revenue earlier than its neighbours, placing Dubai in a stronger position.
Dubai’s rise cannot be understood without its geography. As Dubai is positioned at the crossroads of Europe, Asia, and Africa, its leaders certainly used this to their advantage and pursued modernisation and globalisation. Its first strategy was aviation. 1960 marked the establishment of Dubai International Airport, successfully situating Dubai as a transfer hub between Europe, Asia and Africa. In April 2024, Sheikh Mohammed bin Rashid Al Maktoum, ruler of Dubai, approved a 128 billion AED expansion plan for a second airport — the Al Maktoum International Airport. The Al Maktoum ambition to become the world’s largest airport symbolises how Dubai sought to anchor its role as the central hub for logistics, investments and urbanisation. Dubai also prioritised advancing its maritime trade with the establishment of the Jebel Ali Port along Dubai’s vast coastline, the largest artificial harbour, connecting Asia, Africa, and Europe. It combined strategy and geography to modernise domestic trade into global supply chains. By prioritising containerisation, in the context of globalisation, Dubai managed to leapfrog ahead of its neighbours and consequently reduce transaction costs. The port exemplifies how Dubai’s modernisation stemmed from the transportation of goods, and not just oil revenue. In my view, Dubai ensured its geography was a comparative advantage by aligning with global trends and infrastructure developments to position itself as a key hub.
Dubai’s unique openness elevated the emirate from a regional hub to a global economic centre. Unlike many of its neighbours, Dubai welcomed foreign talent, skills and capital, strategically positioning itself as an inclusive platform where global expertise could blend with local comparative advantages with local goals to fuel modernisation and development. The creation of Jebel Ali Free Zone (JAFZA) in 1985 marked a monumental turning point in Dubai’s growth, offering zero corporate tax, minimal trade barriers, and 100% foreign ownership. This liberalisation set a blueprint for a demographic transformation, with foreigners making up 90% of Dubai’s population. Despite many other countries, such as Saudi Arabia, aiming to restrict foreign participation, Dubai fostered a far more optimistic outlook. I see Dubai’s embrace of foreign direct investment, trade liberalisation and knowledge transfer as a decisive factor, with skilled foreigners driving much of its economic expansion. The emirates visionary policy of openness inherently accelerated economic growth by generating employment, business and cash flow.
Tourism was a key pillar to Dubai’s transformation. Dubai invested heavily in urban projects, such as the Burj Khalifa, Burj Al Arab, and Palm Islands, in an attempt to rebrand the emirate as a luxury, modern, and unique destination. The monuments positioned Dubai as a global hub of architectural theatre, spectacle and opulence. Notable sporting events such as horse racing, international Golf tournaments, and the infamous Formula 1 in Abu Dhabi, placed the city’s name on the global calendar. Dubai also promoted itself as a world-class hub of cosmopolitan leisure and indulgence with its annual shopping festivals. Dubai’s diverse social calendar acted as a magnet for tourism, attracting visitors through the uniqueness, distinctiveness and opulence of its events. Tourism in Dubai served not only as a revenue stream but also as a reputational strategy for sustainable progress. Emirates Airlines played a vital role in advancing Dubai’s connectivity, helping transform the city into a central transit hub. Its diverse and expansive flying routes not only positioned the emirate at the heart of international travel routes but also directed visitors through Dubai, boosting demand for hotels and the retail sector. Dubai thus leveraged connectivity, reputation, and entertainment as cornerstones of economic growth.
Dubai’s focus on financial freedom and political stability has attracted businesses to the emirate. The Dubai International Financial Centre (2004) was a fundamental milestone, offering independent jurisdiction with its own regulatory framework modelled on English common law. Dubai’s political environment, free from coups and major attacks, offers further security and certainty. Although absent elsewhere in the region, Dubai’s groundwork created transparency and certainty. Unlike Tehran, convulsed by revolution, Beirut, devastated by civil war, or Cairo scarred by an authoritarian regime, Dubai’s stable monarchy is relatively insulated from upheavals by avoiding overregulation and heavy-handed regimes. Therefore, investors were provided with a sense of predictability and security, labelling Dubai as a trusted haven for investment and global capital. Drawn by the certainty, hedge funds, private equity firms and wealth management firms established a presence in the emirate. The number of hedge funds operating within the International Financial Centre surged by 72% by mid-2025. Dubai also witnessed a surge in property acquisitions. Luxury apartments and trophy properties dominated the city’s urban landscape, as international buyers were drawn by Dubai’s tax incentives, liberal ownership rules and the predictability of its political environment. By creating stability and reliability, Dubai’s International Financial Centre and political certainty attracted global finance, casting Dubai as a sanctuary for private wealth.
Dubai didn’t inherit its metropolis — it built it from sand to skyline. Its transformation was not a story of chance, luck, or oil windfalls but of policy-driven reinvention. By converting modest hydrocarbon revenues into primary capital for infrastructure, prompting openness to foreign capital and labour, and leveraging its geographic location, the emirate developed a distinguished, sustainable, and credible economy. Tourism and spectacle gave it a brand of steel and luxury, while aviation and ports ensured Dubai’s strong position in global supply chains. The Dubai International Financial Centre institutionalised legal certainty and global accessibility, while political stability offered investors the region’s scarcest commodity: predictability. The culmination of visionary policy, authoritarian pragmatism and appetite for growth enabled Dubai to surpass traditional hubs like Tehran and even rise to challenge global capitals like London. Yet, Dubai’s success doesn’t come without its faults. Although the emirates’ dependence on migrant labour underpins Dubai’s construction boom, it exposes stark inequities. The city’s epochal urbanisation carries steep environmental costs, sustained by relentless air conditioning, desalination, and growing urban waste. Dubai’s financial liberation, though a strength, leaves the emirate vulnerable to property bubbles and sudden shifts in global capital. Nevertheless, these flaws do not diminish Dubai’s success; they simply highlight the risks inherent in such accelerated growth. Few cities can replicate Dubai’s ascent, built on a singular mix of unique geography, stability, and bold liberalisation. Yet, the case study of Dubai fundamentally proves that nations are not bound to their inheritance. In under 60 years, visionary policy, relentless ambition, and strategic leverage led to Dubai’s transformation from a fishing village into a global economic powerhouse, explaining exactly how Dubai became what it is today.
