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Global city model faces major challenges in Gulf

Monday, January 12, 2015

Subject

Competition for regional hub status in the Gulf.

Significance

Over the past decade, the cities of Abu Dhabi, Dubai, and Doha have invested heavily in efforts to position themselves as regional hubs in a globalised world. 'Mega-project' developments in sectors ranging from aviation and petrochemicals to finance and real estate have integrated Gulf cities into contemporary global networks. Competitive rivalries nevertheless raise concerns about overstretch and oversupply, and the recent falls in international oil prices also cast doubt over planned future projects.

Impacts

  • Long-term development 'visions' may be scaled back and short-term projects suspended if oil prices remain low for an extended time.
  • Financial sector developments indicate that a saturation point may have been reached beyond which further expansion is limited.
  • Worker segmentation will grow starker if governments impose fees and quotas on expatriates to shield Gulf nationals from budget cuts.
  • Successful transition to regional hub status will be key to sustainable growth and political stability in the longer run.
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