The economic bubble that was waiting to burst in Dubai has finally burst and the Dubai ruler owned Dubai world has defaulted on debt payment. If one was to closely examine the development model of the region it is not too dissimilar to a Ponzi scheme. A a false sense of well being is artificially created by fueling growth by putting in more and more funds into grand projects that are exclusively the preserve of the rich. In the recession hit world the rich have become cautious and are not willing to consume as before. No wonder the bubble has burst.
The economy of the entire region is resting on a single petrodollar leg. Human capacity of indigenous people has not been built and the economy is sought to be created through expatriates who come in to the region for attractive remuneration. A diversified asset base that is built on the strength and innovation of the local people with support from experts from outside has not been created. It is high time that the Gulf region rulers start thinking on recreating a model that is more sustainable and maybe less jazzy but brings all round prosperity to the people of the region. It is also a lesson to both business and nations who need to look at their growth models more closely.