Urbanisation trends in the MENA

Urbanisation trends in the MENA accelerated with the advent of oil and consequently in response to the high earnings that ensued.  These trends got concentrated within the hydrocarbons production and transformations centres such as those along the western side of the Arabian Gulf, along the Libyan shoreline, the Algerian hinterland and of course in all those historic-economic-political centres of decisions.  

The question that I should imagine everyone would be asking after reading this article is : would all this be impacted by the nearly 2 years old slump in oil prices ?    

The proposed article written a year ago by Ghassan Hasbani, CEO, Graycoats and author of Oasis Economies, the Middle East in 2030 and co-author of the World Economic Forum Competitiveness of Cities report.  Excerpts are reproduced.

A view of Jumeirah Beach Residence in Dubai, with the Palm Island Jumeirah in the background. REUTERS , Steve Crisp

The 3 types of city shaping the Middle East

The Middle East and North Africa region is undergoing a transformation, including significant growth in the youth population and an urbanization trend that will see a very large number of people move to key cities.

At 11.2 million km², the region’s territory is bigger than the US (9.8 million km²), China (9.5 million km²) and the EU (4.3 million km²).

Between 2006 and 2013, the region’s GDP grew by 43% compared to 20% in the US and 15% in the EU.   During the same period, the population grew by 10% compared to population growth of 7% in the US and 4% in the EU and China.   The population is expected to double in the next 30 years.   GDP in the Middle East accounts for 4% of global GDP and is expected to grow at an annual rate of 4%.

Population MENA as compared to others

Political changes are expected to create economic growth, provided sufficient investment is made in young people and in ensuring they have job opportunities.

The region’s population is increasingly living in larger urban centres, with 31% of people living in the biggest 30 cities.   This number will almost certainly continue to rise, as more rural dwellers move into urban areas and new cities emerge.

As political dynamics in the region change, influenced by socio-economic shifts and global tensions, it is inevitable that economic centres will also change.   A recent report from the World Economic Forum highlighted that more than ever, cities are the lifeblood of the global economy.   Their competitiveness increasingly determines the wealth and poverty of nations, regions and the world.

The question of what makes cities successful is therefore one of the most important of the 21st-century political economy.   For most people, the map of the global economy that comes to mind is of nation states interconnected through flows of trade, capital, people and technology. . . . An alternative map of the global economy comes to mind: one of cities connected across land borders, seas and oceans through the exchange of goods and services, foreign direct investment, migrant and short-term workers, and border-hopping technology.

The Middle East is no exception.   Among the biggest 30 cities, it is possible to identify those that form key hubs within an interconnected network of trade and relationships in the region, and play a key role in the development of the regional economy.

From the list of biggest 30 cities in the region by population, we can see three different types that are bringing regional and global competitiveness to a sub-national level: international cities, hub cities and mega cities.

These cities differentiate themselves through institutions, policies and business regulation, hard connectivity (infrastructure) and soft connectivity (culture, community, use of advanced technology). While the level and impact of each of these varies, the cities that clearly emerge head and shoulders above others possess at least some element of each category.

International cities

Dubai is a clear example of an international city that has developed an advanced governance system that allowed it to attract multinationals that serve the region.   The turn of the century was an inflection point in the development of Dubai as a global city, and many of its effective institutions were formed or evolved significantly within the first decade of the 21st century. Dubai’s institutions can be grouped under four broad categories that give it a competitive edge: governance, legal, trade and financial.   At the top of these institutions is the executive council, with the vision and execution management that allowed the city to thrive in a short period of time.

The Emirate city managed to attract global business thanks to its strong economic incentives, which are underpinned by a regulatory and legal system developed sufficiently to encourage global and local enterprise to do business within its jurisdiction. Dubai is subject to the Federal law of the UAE but retains independence and rights in certain areas.

In terms of hard and soft connectivity, the city is well developed, with advanced communication and transportation networks. It was also able to preserve the traditional culture and accommodate a wide array of nationalities comfortably within its borders.