Main Industry Clusters in Dubai
Main Industry Clusters in Dubai: Description of the main industry clusters in your city. Please use the agglomeration economies model to explain clusters in your city (e.g. the presence of input sharing, labor pooling, and knowledge spillovers)…
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Main Industry Clusters in Dubai
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Description of the main industry clusters in your city. Please use the agglomeration economies model to explain clusters in your city (e.g. the presence of input sharing, labor pooling, and knowledge spillovers).
Solution
Main Industry Clusters in Dubai
The concept of agglomeration economies describes the benefits agencies get by positioning themselves closer geographically. It creates an ideology around forming a cluster within an industry to establish economies of scale and increase networking’s corresponding effects (Thisse, 2018). Therefore, there is reduced operational costs because of many competing suppliers, highly specialized operations, and divided labor scales. Moreover, low production costs positively impact companies in the cluster attracting more customers and creating an extensive customer and supplier base across regions. The agglomeration concept explains to urban economies the increasing size and structure of urban settings in cluster-like structures.
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In Dubai, the presence of input sharing, labor pooling, and knowledge spillovers define agglomeration economies in the context of urban development and growth. Research on the impacts of agglomeration on urban developments has not been successfully quantified because of inadequate information for model estimation through connections between the two variables exist. Urban economies determined the clustering effect’s underlying causes: labor pooling, spillover information, and intermediate inputs sharing.
The presence of input sharing presents profitable ventures for companies within proximity. The relationship between producers and manufacturers is always mutual despite stiff competition and misunderstandings to ensure business operations are run and managed effectively. This allows companies to receive appropriate inputs, as is the case for industries that do not need standardized inputs or have a higher innovation rate.
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Labor pooling works under a similar concept, given that the larger the labor pool, there is gradual diversity and specialization. It benefits both the firm workers (Thisse, 2018). A firm’s productivity is informed by an increasing workforce responding to a sized labor force to meet current demand. Moreover, labor pooling alleviates increasing wages in response to high demand since labor supply is less likely to be affected by strain from a given sector. Knowledge spillover pushes to facilitate future innovation and create externalities.
Over the years, Dubai has exhibited similar economic ascents. This occurred not by chance or presumption of its rich carbon resource base. Consequently, nations with more precious resources fail to exploit it to their advantage for prosperity and development fully. Dubai’s brilliant and rewarding developments stem from mutually beneficial international relations, transparent and visionary leadership, and vigorous executions witnessed over the years. Dubai has been vigilant with resource use, having established sustainable approaches to help alleviate future uncertainties. Furthermore, Dubai has huge investments in assets and finances to aid gradual growth and progression in funding education and health amenities.
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From 2006 through to late 2008, Dubai was in a financial crisis with a price inflation rate of 15% (Stavropoulos & Skuras, 2015). Despite the government planning adequately through annual budgetary allocations, the situation worsened. Planning activities were made based on conservative oil price forecasts but were below favorable and expected levels, hence though times were inevitable.
The Gulf’s construction sector recruits an estimate of 10 million construction workers; most of them are migrants from Southeast Asia, Africa, and South Asia (Stavropoulos & Skuras, 2015). There is a perception of increased use of variously called labor suppliers, labor brokers, workforce suppliers, or labor outsourced subcontractors in Dubai. Some agencies recruit laborers and provide them with food and accommodation and will be given wages and insurance. However, unethical issues that breach employment requirements are rampant, including late and non-payment, failure to renew employee visas, and movement restriction.
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References
- Stavropoulos, S., & Skuras, D. (2015). Firm Profitability and Agglomeration Economies: An Elusive Relationship. Tijdschrift Voor Economische En Sociale Geografie, 107(1), 66-80. doi:10.1111/tesg.12125
- Thisse, J. (2018). Human Capital and Agglomeration Economies in Urban Development. The Developing Economies, 56(2), 117-139. doi:10.1111/deve.12167
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