"Somewhere between 15 to 25 percent of the 125,000 construction cranes currently operating in the world today are located in Dubai," writes Morgan Stanley chief economist Stephen Roach. (Thanks to Brad Setser for the tip.)
Roach visited Dubai three weeks ago; in his opinion, the construction boom is even more spectacular than what he witnessed in Shanghai over the last decade. Roach has a number of interesting things to say about what Dubai's spending and investment priorities might portend for the global economy, as does Setser, but Roach's big-picture conclusion is the crux:
The cranes of Dubai are emblematic of a much deeper point: We need to update our thinking about the Gulf economy -- especially insofar as its internal development efforts are concerned, but also with respect to its role in world financial markets. It was only a little over 33 years ago when rising oil prices first came into play. Since then, the economic development of Middle East oil producers has been nothing short of extraordinary. Dubai underscores a critical difference between then and now. Even if it ends up being a bubble, I suspect there will be no turning back for the new Middle East. In a world where the globalization debate is dominated by China, it is high time to broaden our horizons.
Roach makes only a glancing reference to last year's Dubai Ports World brouhaha, in which xenophobic fears that a company controlled by Arabs would be operating some U.S. ports led to a political firestorm. But it's worth returning to that embarrassment. U.S. politicians, both on the left and the right, and a significant portion of the population, heard the name "Dubai" and equated it with "terrorist threat." That kind of knee-jerk reductionism doesn't match up well with the evolving Dubai skyline.