Dubai Chamber releases report on Dubai's competitiveness in the Indian market

But with the basis of Dubai's growth strategy continuously under threat from global competitors and now the current global crisis, the challenge for Dubai lies in maintaining its current export growth potential.

Achieving this will require the emirate to maintain and improve competitiveness relative to competitors, and to expand its global market share either by increasing its export market and/or by taking advantage of the potential within established markets. Achieving these will require the identification of the products and markets in which Dubai has competitive advantage/disadvantage.

So far, there has been little or no attempt to identify Dubai's competitiveness and the implications the competitiveness of major competitors may have on Dubai's exports in the global economy. Given the export sector's pivotal role in enhancing and sustaining the emirate's economic growth this article identifies Dubai's competitiveness within the Indian market due primarily to India's prominent role as an export market for Dubai. Given concerns about the competitive challenges posed by China's rise in the international market coupled with China's dominance in the Indian market, this article also explores the structure of China's competitiveness and the extent to which both compete in the Indian market.

The most common and widely accepted method of identifying the industries within which an economy has competitive strength is the index of Revealed Comparative Advantage (RCA). The index uses data on export shares and is measured as an economy's share of world exports of a particular industry and by the same economy's share of total world exports. A comparative advantage is "revealed", if the RCA index is greater than 1. If RCA is less than unity, the country is said to have a revealed comparative disadvantage in the industry. The index reflects the underlying comparative advantage in a particular industry as determined by technology and factor endowments, modified by government policies designed to draw resources into favoured industries.

Table 1 presents Dubai's RCA index in the Indian market. The index exceeds 1 in 23 industries indicating that Dubai has competitive advantage in 24% of its exports to the Indian market when compared to India's imports from the rest of the world. The most competitive industry as identified by the index is pearls, precious or semi-precious metals at 6.3, followed by musical instruments and parts thereof at 6.2. This implies that Dubai's export of precious metal and musical instrument in 2007 was 6 times higher than its share in the total world exports of precious metals and musical instruments.

Relative to China in the Indian market however, Dubai has competitive disadvantage in the export of 7 industries: umbrellas, articles of apparel etc., manufactures of plaiting material, other man-made textile articles, bird skins, feathers etc., meat, fish and seafood, and toys and games. Exporters may therefore need to pay attention to improving the variety and the marketing of these products with the aim of delivering them to the customer with the required quality in order to increase competitiveness.

China on the other hand has RCAs in 58 industries -around 61% of total exports to India. The most competitive industry identified by the index is bird skin, feathers, artificial flowers and human hair at 22, indicating that China's export of bird skins etc in 2007 is 22 times higher than its share in total world exports of birds skins and the likes in the Indian market when compared to the rest of the world.

Comparing the two exporters in the Indian market shows that Dubai has sole advantage in the export of 7 industrial commodities: pearls and precious stones, meat and edible ofal, beverages, spirits and vinegar, cereals etc, essential oils and perfumes, miscellaneous chemical products, and edible fruits, nuts etc (Table 2). There are however 16 industries where both economies have competitive advantage. Of these Dubai is more competitive in 8 industries and is just as competitive as China in the export of aluminum and articles thereof.