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Weekly UpdatesGlobalization processes and responses to them have important consequences for the growth and development of cities. This, however, is not a uniform process. The outcome at the regional and local level is highly path-dependent on inherited social, economic, and regulatory structures and relationships. This development path is heterogeneous and the path to regionalization and globalization of a city is influenced by multiple factors such as its geographic location, resource availability, and local productions and service advantages, to name only a few.
Singapore is often quoted as an exemplary city to have successfully embedded its development strategy within the global economic circuit while the main United Arab Emirate (UAE) cities, Abu Dhabi, Dubai, and Sharjah are among many urban regions in the developing countries that hope to emulate Singapore as an emerging global city. Although there has been extensive research examining the impact of the globalization process on urban and regional development in various geographical areas including Singapore, there is a distinct lack of studies on the Middle Eastern region, particularly the UAE cities. In view of this, the following study delves into the very path that each of the subject cities has employed and is an attempt to evaluate both the past development and the present and future capacity of their milieu, through an institutional study approach, to accomplish their respective "development visions" and emerge as economic centres of the global supply chain.
PROCESSES OF GLOBALIZATION AND THEIR IMPACT ON CITIES
There are many different approaches to the study of globalization and global cities, but some important concepts that have emerged from the body of literature are complementarities and competition. As networks develop, they engage in complementary activities; at the same time, they compete with each other to attract investments as illustrated in the studies reviewed in the following sections.
In their efforts to secure international investment, countries and cities today are increasing their operations in conditions of changing comparative advantage. As a result, rather than relying solely on traditional concepts of comparative advantage in terms of lowest production costs or highest investment incentives; cities are forming urban alliances and economic synergies within and across national boundaries in order to utilise different urban/regional functions and factor advantages towards accomplishing common economic objectives.
Network functionality and competitive co-operation creates synergistic effects for a win-win situation. Success is often dependent on the ability to offer institutionalising processes to attract flows of investment and entrepreneurship and to offer a variety of external economies of sufficient scope and scale to business.
One significant aspect that emerges from these studies is the recognition of the increasing importance of the business environment as a determining factor in the competitiveness of a city. Central to this is the role of policy factors and institutional design of a city. As a result, the institutional approach has gained importance in explaining the competitive and comparative advantage of cities.
THE INSTITUTIONAL APPROACH
The institutional approach has gained importance for analyzing the diversity of economic formations in different regions in recent years. Institutions have been defined as "rules of the game" in a society. Organizations, whether political, economic, or social, behave and perform within a framework defined by institutions, which are regarded as both formal and informal rules. Formal rules are laws and regulations while the informal rules are norms, conventions, traditions, and customs.
Thus, the institutional approach does not emphasize the presence of institutions per se but rather the process of institutionalization--the institutionalizing processes that both encourage and support diffused entrepreneurship -- a recognized set of conduct, supports, and practices.
The questions to ask therefore -- are cities up to the challenge of creating the kind of institutional thickness required? Are existing and inherited institutional structures and interest groups an obstacle to the kind of innovative milieu that is required for embedding entrepreneurship and international capital?
RESEARCH METHOD
The methodology underpinning this research draws upon the institutional school of urban analysis and academic work on world cities and global urban networks. In essence this is an examination of rules, regulations, conventions, and structures that shape processes and resultant interactions vis-a-vis the city's capacity for attracting and embedding international business.
In evaluating institutional capacities in the studies, a series of semi-structured interviews were conducted. These involved senior policy makers from different government departments and agencies, concerned with the formulation and implementation of economic and urban policy. International private sector participants were drawn from economic sectors that have been identified as being central to the economic globalization process in terms of higher value added functions as well as the more traditional sectors of comparative advantage in each case study city. Overall a total of 118 interviews were carried out in the four cities encompassing 15 different private categories.
The questionnaires and the interview programme were designed to enable detailed exploration of perceptions and actual experiences of both public officials and international firms in respect of a range of institutional processes and capacities framing and facilitating the business environment in the studied cases. These include general development vision, the stability of the business environment, security of investment, impact of specific regulations, and the quality of spatial development and infrastructural capacity.
SINGAPORE
The competitive city of Singapore (Exhibit 1), as we know it today, has developed through rapid economic and socio-cultural transformations. This development model is built on the recognition by the public administration for value addition and adaptation of an export-oriented growth model, a strategy employed by most emerging markets in Asia. Singapore transitioned from a manufacturing base in the late 1960s and 1970s, to a knowledge intensive sector in the 1980s. This led to an advancement in the value chain in this sector in the 1990s, to reach the platform of a highly recognized regional city of the 21st century, demonstrating the strong fundamentals of the institutional system. The Economic Development Board (EDB) and the Trade Development Board (TDB) are the key drivers for taking Singapore in the regional and global marketplace and are the statutory bodies that aim at attracting businesses through fiscal incentives, sound business policies and environment.
Moving towards the new century, the institutions have initiated the Singapore 21 plan. This includes Tourism 21, Industry 21, and Construction 21, which are mandates to establish and achieve goals within these sectors.
To date, more than 5,000 international companies operate in Singapore, with about half having regional operations. This growth has been contributed to a significant extent by the 20% foreign workers that reside in Singapore. This large population base of expatriates reiterates the demographic effects of globalization on cities.
UNITED ARAB EMIRATES
United Arab Emirates (Exhibit 2), hereon UAE, a federation of seven emirates--Abu Dhabi, Dubai, Sharjah, Ajman, Ras al Khaimah, Umm al Qawain and Fujairah, was established in 1971. Of these seven emirates, Abu Dhabi and Dubai account for 60% and 25% of UAE's Gross Domestic Product and have been the frontrunners in the economic growth in the decade spanning 1990-2000, when the UAE recorded a growth of over 80%. Today, the country is a major regional centre for trade and shipping, and business and IT services. A report by Emirates Industrial Bank (EIB) issued in May 1999 ranks the UAE as the third most important re-export center in the world (after Hong Kong and Singapore respectively).
With its low custom tariffs, no personal income tax, low corporate tax, and secure business environment, UAE has become a preferred business location in the Middle East market. UAE citizens account for a little over 20% of the population, which further emphasizes the need to study an institutional system that caters to economy and its development.
Abu Dhabi is the largest of the seven emirates and the federal capital. It is the biggest oil producer in the UAE, controlling more than 85% of the UAE's total oil output capacity and over 90% of its crude reserves. Abu Dhabi's primary strategy has been the privatization of the manufacturing sector, a notable example of which is the Taweelah A-1 Independent Water and Power Project. At the same time Abu Dhabi has diversified its economic base particularly aiming at developing oil related petrochemical industries as well as producer services and tourism.
Dubai: The Emirate of Dubai, world renowned for the Burj al-Arab 7-star hotel, is built along the edge of a narrow 10-kilometres long, winding creek which divides the southern section of Bur Dubai, the city's traditional heart, from the northern area of Deira. Dubai's oil reserve has reduced over the past decade and is now expected to be exhausted within 20 years. Given the depleted natural resources, this emirate has diversified its strategy for development with added emphasis on providing a service base for financial services, IT, tourism, sporting events, and transit trade, in its bid to become the financial, business, and high tech centre for the region. In the aftermath of September 11, 2001 and the U.S. government's decision to clampdown on funds and investment from the Middle East, according to the Financial Times about $200 billionn of Arab funds have been withdrawn from the U.S. Much of this will be reinvested in Dubai strengthening the city's position as a global financial and business center in the Middle East North Africa region.
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