The Political Economy of Dubai

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Recommended: The nature of political economy summary

A rentier state is one whose economy entirely depends on the income obtained from selling of natural resources to the outside world, in other words the proceeds obtained from renting of these resources. Natural resources in this case are oil, natural gas and other mineral elements. A major difference between a rentier state and a production state is that the former uses the rental proceeds obtained from the rest of the world to support its citizens the latter depends on its citizen’s tax to develop its economy. The rentier state theory of the Persian Gulf is a hypothesis explaining why the rentier states or the oil rich countries tend to be less developed and their governments less democratic compared to their counterparts in natural resources deficient countries. Some researchers associate underground wealth with curses. However, this theory holds water. According to Hossein Mahdavy’s rentier theory, a rentier state with a rentier economy can lead to a rentier mentality, which serves to destroy the future of that state’s economy.

The theory was first developed by Hossein Mahdavy taking into account Iran’s pre-revolution economy of the 1970’s. This theory was then adopted to suit the whole Arab world. The Mahdavy’s theory covers the whole of the Persian Gulf but it can also apply to the rest of the world.

The Iran’s oil concerned the West in this manner; Germany attacked its former ally, the Soviet Union in 1941, which on the other hand befriended Britain. Afraid that Reza Shah, Iran’s leader, would link the oil rich country to Germany, Reza’s son, Mohammed Reza, took over from his father and helped his country to get aid from Britain.

Mohammed Mossadegh, the godfather of the populist petroleum politics, forced shah t...

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...the Middle East and North Africa: A Historical Encyclopedia. Santa Barbra, CA: ABC CLIO Publication, 1978.

Hazem, Beblawi. The Rentier State. New York, NY: Routledge Publication, 1987.

Hrischl, Ran. Constitutional Theocracy. Cambridge: Library of Congress Publication, 2010.

Kanna, Ahmed. Dubai, the City as a Corporation. New York, NY: University of Minnesota Publications, 1984.

Oxford Business Group. The Report: Dubai 2008. London: The Oxford Business Group Publication, 1966.

Ramos, Stephene. Dubai Amplified: The Engineering of a Port Geography. Surrey: Ashgate Publication, 2010.

Shemirani, Manda. Sovereign Wealth Funds and International Political Economy. New York, NY: Ashgate Publications, 2011.

Yates Douglas. The Rentier State in Africa: Oil Rent Dependency and Neocolonialism in the Republic of Gabon. Asmara: Africa World Press Publications, 1996.

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