What a difference a year makes. One year ago today Dubai World requested a standstill on its debts from its creditors. While uncertainty carried the day for several weeks after the announcement, the view is far clearer today.
Dubai World has now re-organised its debts. In doing so the emirate has made important choices about its future: the property market and financial services sector will be less integral components of Dubai's growth. The city's dynamism will instead be tied to retail, global trade, and to transportation. While this strategy is in a certain sense a retrenchment, it is also a return to the roots of the emirate's historical strength.
Since Sheikh Rashid al Maktoum decided to dredge Dubai Creek and build a port at Jebel Ali, much of the UAE's strength has been tied to its infrastructure. Transport networks, harbours and airports have connected the UAE to the rest of the world.
But with lower barriers to the world's capital, labour and intellect, the country was also less protected against its contagions. The global financial crisis spared few markets and reached its high-water mark here last November.
What is clear in the wake of the crisis - both here and throughout the world - is that there is an infrastructure more important than highways or a modern skyline. Development depends on far more than attracting investment from abroad. For the long-term, cultivating human capital at home is what allows a society to flourish. And underneath it all are laws and institutions that support a nation's growth and steady it when it is subject to stress. And yet, this infrastructure often matures at a different pace than the society that is built upon it.
Dubai now has the breathing room to plan for the longer term. Whatever the economic tide may bring, a market that rests on high standards of transparency and corporate governance is one that will thrive.
