Dubai: A Cluster For Medical Tourism Industry Clusters and Firm Competitiveness (6106)

Marcus Borg, Moa Karlsson, Andrea Pariani, Federica Sordello, Ziyue Zhou Executive Summary 2 This report provides an analysis of the healthcare and medical tourism cluster in the Emirate of (UAE). With a focus on Porter’s Diamond Model, different models about strategy and competitiveness are applied to guide the analysis, which is divided in four parts.

In the last decades, globalization, new technologies and lower information cost made it possible for patients seeking medical treatments to move across the globe to find the best provider in terms of quality of care or cost, changing dramatically the healthcare industry

The , starting in 2002, implemented plans, policies and legislations to transform the city into a global hub for medical tourism by encouraging foreign investments and creating a constructed cluster

In our project, we analysed the macro and micro factors that had an effect on the formation and development of the Dubai Healthcare Cluster

Following the Funnel Model, we made an environmental analysis of the United Arab with a focus on Dubai to understand the economic, political and cultural elements that had an impact on the cluster

Later on, we used the Five Forces Analysis to understand the distribution of power among the players in medical tourism and we collected data to understand the trends related to cost-effectiveness, value chain and regulations that are shaping the healthcare industry

The next step was to define the healthcare cluster in Dubai by mapping it and using models such as the Four Lenses Model, the Hollywood Model and the Inverted-S Model

Through the Diamond Model, we defined the microeconomic environment that surrounds the cluster and we highlighted the elements that might have a negative impact over the cluster’s performance

Furthermore, we considered the interactions among the players with the 7 Gaps Model in order to assess the cluster dynamism

We provided an overview of the competing clusters around the globe to identify the competitiveness issues that the cluster is facing

Going down in the Funnel, we presented Thumbay Group, a firm playing in the Dubai healthcare cluster, defining its role and the motivations behind its entrance in the cluster with the Radio Model

We found out that the cluster is not attracting the expected number of customers and is facing issues in creating a profitable business model and in competing with other clusters around the globe.

To tackle the problems highlighted, we suggested a shift in track using the Railway Model and some specific policy recommendations to strengthen the four sides of the Diamond Model and guarantee the survival of the Healthcare cluster in Dubai. Agenda 3 Down the funnel, investigating how competitiveness and innovativeness are shaped by both macro and micro factors. A complete analysis of the Dubai healthcare cluster for medical tourism.

Economy Demographics Culture Geopolitical Environmental Analysis (pp. 4 - 7) PESTEL Analysis History Railway Model

Cluster Overview Value Chain Five Forces Analysis Four Lenses Model Hollywood Model Cluster Analysis (pp. 9 - 23) Evolution Diamond Model 7 Gaps Model Competing Clusters Competitiveness Issues

Overview History Railway Model Firm Analysis (pp. 25 - 27) Radio Model Performance

Policy Recommendations (pp. 29 - 32) Environmental Analysis – UAE Key Facts and Figures 4 UAE is an exceedingly rich and open country that historically faced many challenges, mainly connected to the efforts at economic diversification to reduce the portion of GDP from oil and gas.

1960 1970 1980 1990 2000 2010 2017

Oil boom, UAE GDP per capita Pearl Economy twice as high as Switzerland Fall of oil prices 9/11

Independence from GB Start of economic diversification policy First oil export Oil price fluctuation Country founded and real estate collapse

Economy Snapshot Demographics Geopolitical Culture

▪ Population: 9.9M ▪ Urbanisation: 85.5 % ▪ Territorial disputes with Iran ▪ Hospitality - take care of your ▪ GDP: USD 371.4 (30th) ▪ Immigration: 88% ▪ 2nd largest Arab Economy guests ▪ GDP per capita: 6th ▪ Men: 68% ▪ Small land mass and no water ▪ Relationships – do business ▪ Oil and gas share of GDP: ▪ % under age of 65: 99% with friends 30%

Environment Cluster Firm Policy Recommendation Environmental Analysis – PESTEL Analysis 5

UAE is a structurally unique country in terms of its government and resources.

Highlights

Political Economic Social UAE is a federation of 7 While rank 1 in competitiveness Despite almost 90% of It is important to be aware of the differences in emirates, where the royal of inflation and having a very inhabitants being immigrants, governmental structure and culture between UAE families elect national stable debt, the government citizenship in UAE is only and Western Countries. Despite being a unified representatives. Political parties budget balance indicator in WEF achieved by decent. The country nation, each emirate is often acting as a are banned. From an analitycal has fallen drastically to rank 89. also falls poor on female individual country within. This leads to perspective, this has not Giving UAE rank 28 overall. participation in the workforce, internal competition of resources and the prevented the country to be Despite oil revenues having at rank 121. Because of the decisions are made by families, clans, tribes etc. ranked 1 in competiveness of decreased, spending plans for country´s harsh climate, most government spending and 2 in 2018 are higher than ever. people live in the cities. An event that highlight this is the opening of the public trust in politicians. world tallest building, . The building was originally named Burj Dubai. However, following the 2008 recession Dubai as an emirate was on verge of financial collapse. The Abu Dhabi emirate agreed to lend money to Dubai emirate on the condition that the tower was renamed to Technological Environmental Legal Burj Khalifa, after the emir of Abu Dhabi, Khalifa Rank 24th in Technological UAE holds a central There is a mixed system of bin Zayed Al Nahyan – son of the founder of UAE. readiness. New technologies geographical position between Islamic and civil law. WEF ranks From an outside point of view, it is singular and and FDI are steadily available East and West. The country has all factors of juridical, policy illustrative to not only build the worlds tallest sky and both are absorbed by firms an abundance of oil resources and auditing and reporting scraper, but also to have Royal Family feuds over in the country. Specifically, but is lacking agricultural standards relatively high, its name. Dubai is taking the lead in this products and clean water, which between rank 10-22. The one field and it is aiming at are partly imported. exception to this is is the legal becoming one of the smartest Furthermore, desertification is rights index, ranked 106th. cities globally by 2020. gradually eating up the country.

Environment Cluster Firm Policy Recommendation Environmental Analysis – Dubai Analysis 6 Among the Emirates, Dubai enjoys a strategic location and political stability; government polices and investments made it an attractive pole for international business thanks to high-quality infrastructures, advantageous cost structure and financial stability.

Dubai is in a strategic location being a bridge between Eastern and Western Countries and the CIS and Location Africa; it is very accessible thanks to the over 120 shipping lines and 85 that connect it to 130 global destinations

Politics Dubai is a low crime and politically-stable country and enjoys financial and monetary stability; the government favours business through liberal economic policies, ownership rules and free zones

The Emirate is characterized by high quality of life which has been reached thanks to excellent Quality of Life infrastructures, low crime, clean environment, tolerance of diversity, cosmopolitan life style, modern public administration and availability of premium consumer goods and services

The government invested heavily to develop transport, telecommunications, and industrial Infrastructures infrastructures which are now considered to be among the best infrastructural facilities in ; these features make the country extremely attractive for international business

The economic system is open and free; there is deregulation of the private sector, no direct on corporate Economy profits, except for oil companies, and 100% repatriation of capital and profits. Furthermore, local entrepreneurs established many partnerships with international businesses

Dubai has an extensive foreign trade network which includes 179 states; therefore, it offers to investors Foreign Trade a wide choice of potential global marketing outlets for a diverse portfolio of goods and services. Moreover, being part of the UAE, it is part of the third-largest export and re-export centre

International companies can benefit from extensive cost advantages; there are no foreign barriers or FDI quotas and the country is really competitive in terms of import duties, labour cost, energy cost, real estate cost and financing cost

Environment Cluster Firm Policy Recommendation Environmental Analysis – National Railway Model 7

UAE diversifies its economy through a cluster development strategy in order to decrease its dependency on oil.

The Railway Model can be used to describe this national situation. Both local and central UAE is a global leader in cluster development. Clusters are governments has continuously placed bets into new paths, or clusters, and then aggressively generally built thanks to government interventions. Combined invested into these. The main goal of this is to decrease oil dependency and achieve with the global leadership in efficiency of government spending, economic diversification. The current goal is to reduce oil´s share of GDP from 30% to 20% by this means that arising clusters are met not only with a business 2021. While it is not a key cluster at the moment, UAE is investing heavily into tourism overall, friendly climate, but also financial support. including healthcare tourism.

Prominent cluster: Tourism. UAE, and primarily Dubai, is the country in the Middle East where tourists spend the most money and is on par with Austria in this regard.

Prominent cluster: Transport and logistics. UAE´s quality of roads is ranked number 1 globally by WEF. The country also hosts two of the world´s largest container ports.

Most prominent cluster: Oil and petroleum. UAE is the 7th largest petroleum producer globally. They are the third largest exporter of crude oil and gas and a member of OPEC. However, among the Emirates, Dubai’s economy is less dependent on oil (6% of total revenues in the budget for 2018).

Environment Cluster Firm Policy Recommendation Agenda 8 Down the funnel, investigating how competitiveness and innovativeness are shaped by both macro and micro factors. A complete analysis of the Dubai healthcare cluster for medical tourism.

Economy Demographics Culture Geopolitical Environmental Analysis (pp. 4 - 7) PESTEL Analysis History Railway Model

Cluster Overview Value Chain Five Forces Analysis Four Lenses Model Hollywood Model Cluster Analysis (pp. 9 - 23) Evolution Diamond Model 7 Gaps Model Competing Clusters Competitiveness Issues

Overview History Railway Model Firm Analysis (pp. 25 - 27) Radio Model Performance

Policy Recommendations (pp. 29 - 32) Healthcare Industry and Medical Tourism – Overview 9 The majority of medical tourists are attracted to foreign countries by higher quality care for cosmetic surgery, dental care, or orthopedic; in evaluating the destination, factors such as political stability and continuity of care are taken into account.

Medical tourists are defined as residents seeking medical, dental, or cosmetic Main drivers of medical tourism surgeries from healthcare providers outside their home countries. It is challenging to provide estimates and forecasts on the medical tourism market Most advanced technology (40%) size because there are disagreements on who can be considered a medical tourist among research firms. Approximately, the market size is estimated to be USD 45.5-72 billion, considering 14 million cross-border patients spending on average USD 3,800- Better-quality care for medically necessary procedures (32%) 6,000 per visit. Service Provided Quicker access for medically necessary % procedures (15%) 40 Lower-cost care for medically necessary 30 procedures (9%)

20 Lower-cost for discretionary procedures (4%) 10

Type of service Deterrents of medical tourism Effects on destination economy

§ Problem in terms of continuity § Support and benefit local Customer Types of care healthcare systems § Medical negligence and § Limit local access to health malpractice care professional and facilities § Psychological hindrance § Push a growth of private § Ethical and moral issues hospitals and clinics “I want good clinical “Destination country “I need to be sure I get § Political concerns quality at the lowest cost” matters to me, I won’t go the best quality” § Social and cultural Low income (often to certain countries” High income people, they go incompatibility uninsured) people, they go to Middle income people, they to very attractive countries countries with the lowest with high-branded medical go to attractive countries Data source: McKinsey Quarterly (2008); Statista (2013-2015) acceptable level of medical with average/above average research leaders treatments treatments Environment Cluster Firm Policy Recommendation Healthcare Industry and Medical Tourism – Value Chain and Flow Across the Globe 10 Medical tourists are connected to healthcare providers directly or through intermediaries such as insurances and medical tourism facilitators; Asia is the continent that attracts the highest percentage of medical travellers from other continents.

MODE 1

Medical MODE 2 Tourism Facilitator Foreign Medical Healthcare Medical travellers by point of origin Tourist Insurance/ MODE 3 Domestic Provider Employer Domestic MODE 4 Healthcare Provider

How the consumer reaches a foreign healthcare provider?

MODE 1: direct medical tourism - consumers are familiar with foreign hospital and make their own arrangements for travel and medical treatment;

MODE 2: medical tourism arranged by medical tourism facilitators - consumers use agencies that specialize in locating suitable foreign hospitals and arranging treatment, transportation, and lodging during recuperation;

MODE 3: medical tourism induced by health plans (insurance) or by employers - it is a way for these two players to reduce their payments for final stakeholder’s healthcare;

MODE 4: medical tourism encouraged by healthcare providers (outsourcing medical services) - for the local healthcare providers, these Data source: McKinsey Quarterly (2008) arrangements generate revenues through fees.

Environment Cluster Firm Policy Recommendation Healthcare Industry and Medical Tourism – Five Forces Analysis 11 Issues threatening medical tourism industry’s attractiveness are high capital requirements and high power of suppliers of specialized equipment. However, the degree of products differentiation is increasing, changing the dynamic within the competitive frame.

Threat of New Entrants (Medium)

§ High capital requirements § Economies of scale both for the supply and demand side § High cost of importing specialized equipment and technology as well as pharmaceuticals § Government policies and specific agreements create incentives able to increase this threat

Bargaining Power of Suppliers (High) Rivalry among Existing Competitors (Medium) Bargaining Power of Buyers (Low/Medium)

§ Private sector competes with the public sector § No single buyer represents a significant share of § Few substitutes for supplier’s input, because it § Exit barriers keep companies on the market revenue is very focused on specific technology and even when they could be generating low or § Sale of “packages” to increase the use of “take- knowledge negative returns. it-or-leave-it” pricing strategy § Many of the specific equipment required are § Degree of products differentiation has been § Hospitals/clinics tend to eliminate any produced by a limited number of suppliers increasing only recently, changing the dynamic middlemen and reduce the cost of powerful within the competitive frame buyers (e.g. insurance)

Threat of Substitutes (Medium)

§ The main substitute is represented by local healthcare § While mobility tends to be high, competition from substitutes increase as every healthcare organization tries to retain key and most talented workers

Environment Cluster Firm Policy Recommendation Healthcare Cluster and Medical – Overview and Performance 12 Medical tourism in Dubai is strongly supported by the government and targets mainly neighbouring countries; over the last decade, the number of physicians has experienced an exponential growth thanks to the attraction of foreign talents.

Medical Tourism Cluster in Dubai General Medical Tourism Industry Performance

Medical Tourism Cluster is a recognized cluster in the § Physicians and Manpower: and it is naturally very connected to the healthcare system of the area. The goal of Dubai Government is to position the region as a globally recognized destination for elective health and wellness treatments 2010 implementing plans, policies and legislations that encourage investment 2016 and improve quality in the healthcare sector by creating a constructed medical tourism cluster. Moreover, the cluster is an attempt to attract the 0 2000 4000 6000 8000 10000 Middle Eastern medical tourists that travel to Asia to receive medical Number of Registered Physicians treatments. In the private healthcare sector, data show that there are 9 non-national Values: excellence, quality, efficiency, transparency employees for every national one § Patients: Stakeholders: Dubai Health Authority, Private Healthcare Providers Dubai Tourism & Commerce Marketing Authority, General Directorate of In-patients 286765 Residency & Foreigners Affairs, Emirates Group, Dubai Airports, DNATA, 6352637 3714934 Dubai Statistics Centre, Dubai Economic Department, Dubai Healthcare Out-patients National City, Dubai Tourism and Commerce Marketing 0 5000000 10000000 15000000 Non-national Number of Patients Specialties in Focus: Orthopedics and Sports Medicine, Plastic surgery, Ophthalmology, Dental Procedures, Dermatology and Skin care, Aesthetic § Quality standards: Practices and surgeries, Preventive Health check-ups, Wellness The UAE have to compete with Western Countries when it comes to patient perceptions of expertise and quality of care; quality standards Countries to target: Russia, CIS Countries, GCC countries, India, should certify the foreign patients’ entire care cycle Pakistan, Nigeria, Angola, UK

Environment Cluster Firm Policy Recommendation Healthcare Cluster and Medical Tourism in Dubai – (DHCC) 13 Dubai Healthcare City is the heart of the cluster; this area is constructed in order to favour the interactions among the players in the medical field and promote knowledge spill-overs. The aim is to attract investments from all over the world.

Dubai Healthcare City (DHCC) Four Lenses Model

Among the many private facilities in the cluster, Dubai Healthcare City (DHCC) Lens one - degree of agglomeration is the world’s first business park devoted to health care along the entire value The healthcare cluster in Dubai has an high degree of agglomeration. After the chain: education, training, clinical care, wellness, spas, business and healthcare launch in 2002 of the Dubai Healthcare City, healthcare providers and related entrepreneurship industries located and relocated their facilities at . § It is a free-zone: companies could benefit from 100% foreign ownership and Lens two - cluster dynamics 100% repatriation of profit The cluster is extremely dynamic. As we saw in ‘Lens One’, there is a high § It occupies two sites: phase one, the 4.1m-sq-foot campus at Oud Metha, and degree of agglomeration which allow for knowledge spill-overs thanks to day-to- phase two, a 22m-square-foot development at Al Jadaf. The focus for the day interactions among different players in the healthcare industry. second phase is on wellness, but it also continues to attract international Lens three - cluster life cycle investment in medical facilities The cluster is still growing by expanding into wellness and attracting new FDI. § Regulation and licensure of all healthcare professionals and operators are Lens four - degree of construction overseen by the Dubai Healthcare City Authority, the governing body of The cluster was planned by national and regional policies that shaped its DHCC. construction rather than naturally evolving. § There are 132 clinical facilities in DHCC; non-clinical ones are 190

Hollywood Model The medical tourism industry is considered to be global since it is based on the idea that patients all over the world are attracted in specific locations to receive cheap treatments or medical services unavailable or illegal in their home country. The aim of DHA is to transform Dubai in a hot spot for healthcare services able to attract FDI, human resources and technologies. In other words, the idea behind the government policies is to make Dubai the next “Hollywood” for healthcare and wellness. The government launched the slogan “Dubai, a Global Destination for Medical Tourism”.

Environment Cluster Firm Policy Recommendation Healthcare Cluster and Medical Tourism in Dubai – Historical Evolution of the Cluster 14 The government of Dubai decided to transform the city in an hub for medical tourism in 2002, with the launch of DHCC; nowadays, the expansion into wellness is ongoing and the maturity of the cluster should be reached in 2021.

2002: launch of DHCC Renaissance The constructed Healthcare cluster entered the “Hero Dynamism 2004: launch of CPQ 2021: Dubai Health Strategy phase” in 2002 with the launch of Dubai Healthcare City; in 2005, the Belgium Medical Center, the first hospital, opened his doors. Nowadays, the cluster is 2011: DHCA still growing by expanding itself in the field of wellness. According to the Dubai Health Strategy, the cluster will reach maturity in 2021. 2017 If the cluster is able to reach maturity, then 2016: Expansion into government investments are still likely to be made in Wellness Decline order to further grow it. This is what has happened in 2005: Belgium Medical Center infrastructure, construction and tourism etc.

Hero phase Maturity Time 1982: Foreign citizens are excluded from free medical care in UAE due to escalating costs, shrinking oil revenues, and change in attitude toward foreigners 1989: Article 36 of the Council of Ministers Order No (11) established nine independent medical districts 1990s: Oil companies and military facilities had still their own medical facilities 2002: Launch of Dubai Healthcare City (DHCC) by Sheikh Mohammed Bin Rashid , Vice-President and PM of the UAE and Ruler of Dubai 2004: Launch of the Center for Healthcare Planning and Quality (CPQ), Dubai Healthcare City’s independent regulatory body 2005: Belgium Medical Center, the first clinic, opens 2011: Establishment of Dubai Healthcare City Authority (DHCA) to oversee DHCC 2013: Dubai Healthcare City community is made of 4,000 healthcare professionals, two JCI-accredited hospitals, more than 100 medical centers and more than 180 support services 2014: The Crown prince of Dubai and chairman of the Dubai executive council approved the Dubai Medical tourism strategy with the Dubai Health

Environment Cluster Firm Policy Recommendation Healthcare Cluster and Medical Tourism in Dubai – Cluster Map 15 Today, a dense network of players and bridge builders define the dynamics of the clusters; their interactions are beneficial for innovation within the medical field and advancement in technologies.

Dubai Health Authority [DHA] Healthcare Providers Healthcare Solutions Providers Academic Institutions Orthopedics Medical Equipment and Technology Mohammed Bin Rashid University of Health Tourism Council Sports Medicine Diagnostics Medicine and Health Sciences Plastic Surgery Laboratory Khalaf Ahmad Al Habtoor Medical Ophthalmology Cord Blood Storage Simulation Center

Dubai Health Experience [DXH] Firms Dental Procedures Pharmaceutical Al Maktoum Medical Library Dermatology Dental Procedures Hamdan Bin Mohammed College Of

Core Aesthetic Surgery Dental Medicine Bodies Dubai Healthcare City Authority Preventive Health check-ups Swiss International Scientific School – [DHCA] Business Support Dubai Wellness and Beauty Providers Industries Facilities Management

Dubai Healthcare City Regulatory District Cooling Research and Public Public and [DHCR] Healthcare Architectural and Related Engineering Consultancy and IT Solutions

and and Partner Academic Institutions Dubai Dubai Support to Research Healthcare Development Agencies Harvard Medical School Healthcare Healthcare Dubai Harvard Foundation Healthcare Management Royal College of Surgeons in Ireland City Authority City Authority Consulting – Investment – Education Education [DHCI] [DHCE] Capital Support to Investment

Private Equity Supporting Customer Support Government Dubai Tourism and Commerce Travel Agency Marketing Authority [DTCM] Dubai Airports and Research Institutions Hotel and Leisure Services Harvard Medical School for Global Restaurants and Cafes Health Delivery – Dubai General Directorate of Residency Medical Tourism Facilitators Convenience Store Al Jajlila Foundation Research Center and Foreigners Affairs [GDRFA]

Bridge Bridge Pharmacy Wolters Kluwer Health Builders

Environment Cluster Firm Policy Recommendation Healthcare Cluster and Medical Tourism in Dubai – Diamond Model 16 The microeconomic environment in Dubai is favourable and makes healthcare and medical tourism a good business case. Great help is provided by government's policies. However, the cluster might be too dependent on the central authorities.

Firm Strategy, Structure and Rivalry Chance

§ Private vs public healthcare providers § Developments of information technologies § International accreditation and § Budget airlines and drop in airline fares partnership with foreign players § General Agreement on Trade in Services § The ability to attract FDI should be § Drop in oil price developed § Ready available packages for medical services Demand Conditions § Medical tourists prefer regional locations Factor Conditions over long distance travel § § Excellent infrastructure Global demand and spending for § Manpower availability and skills healthcare treatments is rising due to § Investments and capital availability aging population § Chronic diseases are increasing Related and Supporting Industries § Patient awareness and expectations are increasing Government § Medical Tourism Facilitators § Outbound medical tourism § Mohammed Bin Rashid Academic § Tailored medical insurance and visas Medical Center § Compulsory medical insurance § Al Maktoum Medical Library and Khalaf § Free-zone Ahmad Al Habtoor Medical Simulation § Meetings between public stakeholders and Center private healthcare providers § Tourism Industry § Investments in training and education § Free zones § Investments in e-health infrastructures § Media and Advertising Industry § Memoranda of Understanding § Dubai Airports

Environment Cluster Firm Policy Recommendation Healthcare Cluster and Medical Tourism in Dubai – Firm Strategy and Factor Conditions 17 Once again, policies give new impulse to the entrance of private competitors, both local and foreign. In this new scenario, the importance of quality is rising and competitive strategies are mainly based on product differentiation through bundling.

Event Impact

Firm Strategy, Structure and Rivalry

Dubai Health Authority has focused on shifting the provision of health services First of all this policy could increase the number of foreigners private from the public to the private sector, implementing a number of policies able to healthcare providers and therefore the competition among them; also the increase the attractiveness of the region. different policies aimed at lowering the entry barriers have the same effect.

This is not to be considered a strategy for the funding of the organizations; Different hospitals and clinics open as the result of a partnership with well- it is rather a way to gain credibility in the global market and International known foreign players accreditation of the quality standards met. Competition is shifting also on the quality of the value proposition.

Healthcare providers have started to sell ready available packages specifically Through bundling and focus on the creation of product differentiation, designed for medical tourists. These offers include not only the treatment, but companies are selling more complete and accessible products and services also return flights, staying at the more prestigious hotels of the area, tourists’ that decrease customers’ effort in making their choice. activities and organized sightseeing of the Emirate.

Factor Conditions

In such a favorable environment, advanced health regulations are very Excellent medical and diagnostic facilities are underpinned by Dubai’s transport important to capitalize on the investments made and to ensure they infrastructure. provide high quality care and patient safety.

It would be crucial to invest in local education and training to secure the The number of foreign doctors and practitioners is substantially higher than the supply of skilled workers for the future. Anyway, enrolling human capital number of national ones. from outside might help develop diversification of ideas and creativity.

Environment Cluster Firm Policy Recommendation Healthcare Cluster and Medical Tourism in Dubai – Demand 18 Demand for healthcare is rising, especially in emerging countries and for some types of diseases. Furthermore, patients tend to prefer regional locations over long distance. Therefore, the cluster should be able to target regional patients, clearly ranking their needs.

Event Impact

Demand

Large volume of travelers prefer regional locations over long distance Dubai’s medical tourism cluster should focus on attracting customers travel. In Dubai, Asian tourists accounted for 33% of the total, followed by from the Gulf Cooperation Council region 27% from Europe.

Due to aging population, the global demand and spending for medical treatments are rising; the global healthcare spending as a percentage of Dubai medical tourism cluster might benefit by implementing also a GDP is expected to rise from 10.4% in 2015 to 10.5% in 2020, mainly in specific strategy to address demand in emerging markets. low-income countries.

There is growing prevalence of chronic diseases and comorbidities; by Dubai could consider the option of focusing on one or more of this 2020, 50% of healthcare expenditure is going to be spent on three leading diseases and becoming an excellence in that field. causes of death - cardiovascular diseases, cancer and respiratory disease.

The cluster should focus on understanding deeply and ranking the Overall, there is increasing patient awareness, knowledge and expectation. need of the medical tourists in order to efficiently market them.

Dubai’s own citizens travel as well to seek medical treatment; mainly, they Even if they are not properly considered the main target group, the go abroad to receive oncology visits, and consult brain surgeons, cluster should not only focus on strategies to attract foreigners, but orthopedists and cardiologists. also on ways to retain local patients.

Environment Cluster Firm Policy Recommendation Healthcare Cluster and Medical Tourism in Dubai – Related and Supporting Industries 19 The importance of related industries and the infrastructures’ system is central in the cluster’s development. Companies in the cluster should increase their ability to capitalize on this positive environment.

Event Impact

Related and Supporting Industries

The number of agencies (Medical Tourism Facilitators) that offer medical tourism This is a positive trend for the cluster since facilitators increase customer services and connect healthcare travelers to hospital and the other way around is awareness and connect the players in the medial tourism value chain. increasing.

Mohammed Bin Rashid Academic Medical Center (MBR - AMC) is a pole of medical education and research in Dubai Healthcare City and it is home to the Mohammed The center is a place where there is the opportunity for knowledge-spillover. Bin Rashid University of Medicine and Health Sciences (MBR - UMHS).

The student community and the members of the DHCC clinical community can These learning resources should play a key role in attracting new talents and access Al Maktoum Medical Library (AMML) and the Khalaf Ahmad Al Habtoor skilled workforce in the cluster. Medical Simulation Center (KHMSC).

Tourism is a central pillar of Dubai’s economic growth; Dubai’s Tourism Vision for The development of infrastructures to attract tourists is beneficial for the 2020 has the objective of attracting 20 million of visitors per year. medical tourism industry.

The presence of free zones attracts FDI and talent from foreign countries; the In Dubai there are more than thirty free zone such as Dubai Silicon Oasis, Dubai knowledge created in these clusters can have a positive effect on innovation Internet City, Dubai Biotech Research Park. creation in the healthcare cluster.

Dubai International Airport is ranked number one for international passenger by Airports Council International, while Central Airport is se to The strategic location and the increase in flight traffic is positively related to become the world's largest airport by 2020. Their geocentric location places the attraction of potential medical tourists. them within four hours flying from one-third of the world’s population and within eight hours of two-thirds.

Environment Cluster Firm Policy Recommendation Healthcare Cluster and Medical Tourism in Dubai – Government and Chance 20 The Dubai healthcare cluster is a planned, constructed cluster. Therefore, the importance of government’s intervention is crucial and policies are aimed at increasing international competition and growing FDI, while the flow of people across borders is increasing.

Event Impact

Government

It lowers barriers and transaction costs to entry the cluster, both as a firm and Availability of medical insurance and visas tailored to medical tourists. as a customer.

Implementation of compulsory medical insurance, which is extended to cover all It supports a shift toward private healthcare providers. nationals as well as expatriate residents and workers.

The DHCC is a free-zone, foreign companies are guaranteed 100% foreign- This is a good incentive to attract FDI, which earlier was identified as a flaw in ownership and 100% repatriation of profit. the Diamond Model’s Firm Strategy, Structure and Rivalry.

it is a chance to discuss the challenges that Dubai faces in competing with other Public stakeholders meet with private healthcare providers regularly. medical tourism destinations and to ensure access to medicines for people within the community.

The government has committed to stepping up investments in training and This will improve HR and confirm government’s support also in the future. education with the Health Strategy 2021.

The government plans to focus on further developments in the e-health This will provide greater flexibility for patients who are willing to move infrastructure. between treatment centers and will attract further FDI.

Chance

New technologies and reduction of travel expenditure enable patients to look for Positive effect on the cluster: easier to attract customers around the globe and options beyond national borders and expand international marketing opportunities. at a lower cost They also brake down cultural barriers.

The General Agreement on Trade in Services (WTO, 1996) paved the way for trade in Regulations worldwide are favoring the movement of people increasing the medical and other services. number of potential customers for the cluster.

Environment Cluster Firm Policy Recommendation Healthcare Cluster and Medical Tourism in Dubai - Cluster dynamism: 7 Gaps Model 21 Interaction between different actors in the cluster represents an important engine to its development. However the constructed nature of the expansion might compromise the natural development of many of the gaps and make them static.

Firm-To-Firm Firm-To-Research Firm-To-Education Firm-To-Capital

• Within the DHCC, a formal • Different research institutes are • Through academic complex • Access to capital is made easier by community of existing organizations is active in the cluster. The most (Mohamed bin Rashid Academic different specific cluster policies established. This promotes networking important ones can benefit from Medical Center) and in partnership promoted by Dubai’s healthcare events and knowledge-sharing state-of-the-art technologies and with renowned academic institutions agencies and government. opportunities. consistent funding from the Royal and medical boards. There is an Furthermore, the presence of high • There is a great difference in terms of Family. integrated academic and clinical capital availability in the Emirates is a structure, ownership and even • The research outcome could be environment positive point. geographical location between large limited by fact that research is still • Healthcare professional at DHCC and • More differentiation from Royal- multinational corporations and considered in a linear way, with clearly other institutions are required to Family-related funding is required. smaller SMEs. This could reduce the assigned roles. However novelty maintain a level of ongoing medical • Partnership with foreign leading cooperation. creation is an open process, and the education to ensure their professional institutions in the healthcare sector current approach limits the flow of knowledge and expertise remain should include the creation of specific ideas across institutional boundaries. current. VC cooperation.

Firm-To-Public Firm-To-Cluster Firm-To-Global Market

The Dubai government is taking a proactive approach towards developing this as a • Interactions with firms in other • To promote Dubai healthcare cluster regional industry and it has developed a number of strategic initiatives: clusters are limited and mostly related sustainability in the long-run, • Dubai health authority promote Public and Private collaboration and to sectors different from healthcare. attention to the global healthcare encourages foreign investments in the health sector in Dubai Learning from non-UAE healthcare value chain and its innovation would • The introduction of a three-month medical tourist visa, for example, has been a clusters is recommended. be crucial. The gap with the global major incentive for foreign patients to seek treatment in Dubai and other • Actors in the cluster should leverage market should be bridged with Emirates more on the many constructed partnership aimed at exploring • Introduction of short-stay visas for specialist doctors, making it easier for clusters in the Emirate, benefitting innovative solutions in the field of I.T. hospitals to bring in experts for consultations and special procedures. from sharing resources and knowledge infrastructures and data science, • A specialised free-zone named Dubai Healthcare City (DHCC), including over with them in critical area for diabetes and non-communicable 120 medical healthcare centres and around 4,000 medical professionals, is healthcare industry’s future disease prevention, workforce another important development. development. development, etc.

Environment Cluster Firm Policy Recommendation Healthcare Cluster and Medical Tourism in Dubai - Competing clusters 22 The Global Medical Tourism market is broadly segmented into type and quality of treatment; Western Countries are focused on high quality treatments while Eastern ones are rather focused on low-cost treatments and medical tourism.

Singapore markets itself as a Biomedical City since 2001 with the aim of Thailand became a hub for medical tourists in the 1990’s after the attracting high-end medical tourism. In contrast with Dubai Healthcare economic crisis in Asia which lead to a fall in domestic private patients City which started from scratch, the Singapore bio-city is a government and hence lead to spare capacity in private hospitals. Today, they are supported networking of established and emerging facilities and focused on orthopedic and cardiac surgery and attract lower-income and organisations. Singapore is considered to be the most efficient health middle-income Americans. system in the world (Bloomberg, 2014)

US Singapore Jordan Thailand Turkey Dubai Canada Korea Costa Rica Spain Malaysia Clinical Quality Medical Tourism Focus Germany Switzerland India Hungary South Africa Bulgaria Focus UK France Belgium Czech Republic Poland Romania

Czech Republic and Hungary offer good quality care with 30-50% cheaper prices thank UK and Germany for cosmetics, dental, and In developed nations such as U.S., Germany, UK, Canada and France fertility. highly advanced treatments are offered. As a consequences, patients travel to these destinations when the same quality is not available in Costa Rica is very successful with US patients seeking elective their home countries. procedures. India is an hub for cardiac and orthopaedic procedures globally.

Medical Tourism Index (MTI): It is a country-base performance measure to assess the attractiveness of a country as a medical tourist destination. According to this index, Canada is the most attractive destination for medical tourism, followed by UK and Israel. Dubai ranks 16th.

Source: Health Beyond Borders Environment Cluster Firm Policy Recommendation Healthcare Cluster and Medical Tourism in Dubai - Competitiveness Issues the Cluster is Facing 23 The cluster has still to overcome barriers relate to costs, regulations and value chain that have an impact over the medical tourism business in the Dubai area.

The cluster faces practical issues in creating a profitable business model for the medical tourism industry; to compete internationally, the cluster should 1. Cost - effectiveness be more cost-effective. Data show that it is cheaper to have surgery in the UK through the National Health Service than in most private hospitals in Dubai

It is difficult to compete on price with clusters in India and Thailand since healthcare prices are mainly driven by salaries, which are related to the cost- 2. Salaries Level of-living index of the given country. Since the UAE are high-income countries, it would not be feasible to match the prices on offer on lower-income ones

Even though DHA is making efforts in creating customized visa and entrance permissions, there are still many barriers when it comes to portability of 3. Insurance Plans insurance plans that have a negative impact on medical tourism

4. Niche Treatments The cluster in not specialised in any niche treatment and, therefore, it does not attract those medial tourists who are looking for specialist advices

It is difficult for patients to get information about doctors’ qualifications as there are no international databases that store this kind of data; as a 5. Quality Standards consequence, there is perception of a lack of transparency in the information provided by foreign healthcare providers

6. Legal Issues It is extremely complicated for a patient to sue a doctor or a facility in a foreign country because of intra-country laws and legal procedures

Dubai’s own citizens travel abroad to receive medical treatments (outbound medical tourism); this is a signal that not enough efforts are in place to 7. Outbound address the domestic demand for medical procedures

There is a huge disparity in treatment costs among the various clinics and hospitals in Dubai and there are no guidelines for patients to asses 8. Cost for Medical Care expenditures and the quality of treatments in advance

9. Lack of Hospital Beds In Dubai’s public hospitals, patients are often turned away because of shortage of beds, even though there are many public and private hospitals and medical facilities, they do not seem enough to face the growing population

10. Screening & Follow-up An efficient system for pre-treatment screening and short-term and long-term follow-up is not in place; this hinders foreign patients

11. Benchmarking A critical issue is that there is not a service that allow medical tourists to benchmark institutions according to quality and outcomes

Environment Cluster Firm Policy Recommendation Agenda 24 Down the funnel, investigating how competitiveness and innovativeness are shaped by both macro and micro factors. A complete analysis of the Dubai healthcare cluster for medical tourism.

Economy Demographics Culture Geopolitical Environmental Analysis (pp. 4 -7) PESTEL Analysis History Railway Model

Cluster Overview Value Chain Five Forces Analysis Four Lenses Model Hollywood Model Cluster Analysis (pp. 9 - 23) Evolution Diamond Model 7 Gaps Model Competing Clusters Competitiveness Issues

Overview History Railway Model Firm Analysis (pp. 25 - 27) Radio Model Performance

Policy Recommendations (pp. 29 - 32) Thumbay Group - Overview 25 The Thumbay Group is an international healthcare provider who is focused on medical tourism; its headquarter is located in Dubai and its facilities offer comprehensive treatments.

Thumbay Group

The Thumbay Group is a diversified international business conglomerate with operations across 20 sectors such as Education, Healthcare, Medical Research, Diagnostics, Retail Pharmacy, Health Communications, Retail Opticals, Wellness, Nutrition Stores, Hospitality, Real Estate, Publishing Technology, Media, Events, Medical Tourism, Trading and Marketing & Distribution. Its network of hospitals is one of the largest healthcare provider in the UAE region.

Headquarter: Dubai International Financial Centre (Free Zone),

Facilities: § Hospitals and Medical Centre in Ajman, Fujairah, Sharjah, Dubai, Hyderabad (India); § Five Clinics that provide comprehensive services; § Pharmacies in Abu Dhabi, Dubai, Sharjah; § Representative Offices in Cameroon, India, Somalia, Chad, Srilanka, Nigeria, Mozambique, Angola, Ethiopia, Ghana, Congo; § Gulf Medical University (Ajman), it attracts a student cohort of over 75 nationalities and faculty and staff from over 22 countries.

Vision: To be known as the preferred hospital for medical tourism in UAE; in the next 5 – 6 years Thumbay Hospitals expect to have about 1000 medical tourists daily

Thumbay Medical Tourism It is a first choice destination for affordable healthcare to patients from over 175 nationalities; they offer executive packages from $500 to $1,400. The Group representatives help foreign patients in planning their trip, getting the visa and book accommodations. Treatments: rhinoplasty, breast lifts, knee joint replacement, hip replacement surgery, liposuction, mother care, dialysis, executive health check-up

Environment Cluster Firm Policy Recommendation Thumbay Group - Shift in Strategy and Growth Over Time 26 Founded in 1998, the Group initially started by expanding its offering in terms of treatments for the patients and by integrating related businesses; later on, it grew by opening operations abroad.

Thumbay Group according to the Railway Model Medical Tourism – International Scope Planning to open representative offices in 2012 20 countries

One Stop for Health Care Services Internationalization Vertical Integration Business is expanded; hospitals, dental Hospitals: India, Qatar, Saudi Arabia, Egypt Pharmacies, labs, construction care facilities, optical stores, gyms, and Ghana company and marketing firm University campuses: Ghana, Malaysia, India 2002 coffee and flower shops

Establishment of Firm Opening of the Gulf Medical College (Education) 1998

1998 2002 2004 2008 2011 2012 2013 2014 2015 2017 2022

§ Launch of the first Body § Thumbay Group is recognized as the Best § Launch of Thumbay Hospital Day Care to offer treatments & Soul Outlet (Dubai) Medical Tourism Provider in the Middle without the need for overnight stay in the hospital East by the New Economy § Launch of Thumbay Hospital and Research § Thumbay Hospitals gets accredited by JCI Center (Ajman), the first private teaching § hospital in the region Launch of Thumbay Hospital (Dubai) § § Foundation of Thumbay Pharmacy and § Launch of Nutri Plus Vita Stores, Thumbay MTQA Certification Strategic Plan 2022: Thumbay Labs Outlet Marketing and Distribution, New Medical § Introduce engineering and management Tourism Division courses at the Gulf Medical University § Create 3 University campuses § Foundation of Thumbay Group § Launch of Thumbay Medical & Dental § Launch of the Centre for Advanced § Reach 1.000 beds in the UAE; 1.500 in § Foundation of Gulf Medical College Speciality Centre Biomedical Research & Innovation and of India; 750 in the Gulf and Africa (Ajman), UAE’s first private medical § Launch of Terrace Restaurant the Centre for Advanced Simulation in § Become the best medical library and college Healthcare museum in the country § The Gulf Medical College becomes the Gulf § Nominated as Emirates Business § Get 20.000 team members Medical University Ambassador for Healthcare & Education § 25 Labs, 100 Thumbay Pharmacy outlets; 40 ZO&MO opticals

Environment Cluster Firm Policy Recommendation Thumbay Group in Dubai – Value Proposition 27 The Group started to operate in Dubai to achieve international recognition as a premium healthcare provider; even tough its role in the Dubai cluster is still marginal, in the future it could gain relevance thanks to its international presence.

Radio Model Private Hospital Performance Indicators for the years 2015 & 2016 (Dubai)

Why the Thumbay Group decided to enter Dubai? Hospitals Years NO. of beds NO. of patients Bed occupancy rate • Prestige and status of global presence: to emerge as a premier international brand and establish themselves as a global entity International Modern Hospital 2015 76 81.680 47,3 • As also an Indian company, following the customers into new markets: increasing 2016 78 84.022 47,7 number of Indians are moving to Dubai for its numerous job opportunities and Iranian Hospital 2015 222 446.725 38,1 reasonable living cost 2016 222 432.119 37,4 Life Line Hospital 2015 28 101.834 44,4 • The government of Dubai’s long-established vision for medical tourism: Thumbay 2016 28 127.746 47,7 Group might have been attracted to Dubai to take advantage of the “Hollywood Medcare Hospital 2015 64 288.015 75,6 Effect”. 2016 42 240.634 98,8 Medeor 24/7 Hospital 2015 81 24.285 8,1 What does the company bring to the market? 2016 49 85.815 74,6 • Innovative products and services and experience from non-UAE markets, due to Mediclinic Welcare Hospital 2015 110 232.494 792 international presence 2016 110 230.771 84,4 • JCI recognition and connections with universities and research centers N.M.C. Speciality Hospital 2015 88 641.177 55,3 • Capital: FDI and human capital 2016 93 254.022 55,2 N.M.C. Hospital - DIP 2015 10 205.534 36,3 What would the company meet in the new market? 2016 43 112.843 43,3 • Dubai Healthcare City Cluster Environment: Thumbay Group has to develop new Neuro Spinal Hospital 2015 39 31.039 69,9 network and relationships 2016 39 30.823 63 • Strong and established competitors: those which have strong connections with the Prime Hospital Dubai 2015 68 92.181 38,2 Western World such as Saudi German Hospital and Medcare Hospital. 2016 63 119.122 61 Saudi German Hospital 2015 352 341.077 14,7 How did the company enter the new market? 2016 163 276.255 44 • Taking it slow: Thumbay Group opened it first branch in 2015 and has been gradually Thumbay Hospital 2015 50 63.599 29,9 opening up new hospitals only if the previous ones are up-and-running. 2016 50 134.198 72,3 • Increasing the number of beds: Thumbay Group becomes more competitive by Zulekha Hospital 2015 76 321.646 80,2 showing greater capability to handle more patients at the same time 2016 76 317.156 80 Statistical ReportHealth 2016 Annual Source: Dubai Data Thumbay Group opened facilities in Dubai to be recognized as an high quality global brand in the Middle East. Even though, Thumbay Hospital in Dubai doubled patient intake from 2015 to 2016; till only account for 1.46% of total admitted patients and it still plays a marginal role within the cluster since Western Hospital, such as Saudi German Hospital, are preferred by medical tourists. However, the Group can exploit the advantage of being present in other clusters for medical tourism around the world, such as India, and its connection to universities and research centres to gain influence within the Dubai cluster.

Environment Cluster Firm Policy Recommendation Agenda 28 Down the funnel, investigating how competitiveness and innovativeness are shaped by both macro and micro factors. A complete analysis of the Dubai healthcare cluster for medical tourism.

Economy Demographics Culture Geopolitical Environmental Analysis (pp. 4 - 7) PESTEL Analysis History Railway Model

Cluster Overview Value Chain Five Forces Analysis Four Lenses Model Hollywood Model Cluster Analysis (pp. 9 - 23) Evolution Diamond Model 7 Gaps Model Competing Clusters Competitiveness Issues

Overview History Railway Model Firm Analysis (pp. 25 - 27) Radio Model Performance

Policy Recommendations (pp. 29 - 32) Policy Recommendation – Railway Model 29 Since the cluster is facing practical issues in creating a profitable business model and in competing with other medical tourism clusters, a track shift from medical tourism toward clinical quality should be considered.

Despite many efforts form the government of Dubai to transform the city into a cluster for medical tourism, the number of foreign patients that are attracted is still relatively low and the cluster is facing practical issues in creating a profitable business model and in competing with other similar clusters around the globe.

One of the main issue is that treatments are too expensive and there is not enough of a comparative advantage that justify the prohibitive price range.

In order to gain competitive advantage, the cluster could start focusing on niche treatments or could become a hub for treatment of Suggested chronic diseases such as cardiovascular diseases, cancer and respiratory diseases. This will end up in a shift from tourist focus to Track: clinical quality focus. Right now, the cluster has started covering some more niche and specific markets (through the Dr. Dana Diet Centre, the London Sleep Centre, and Dr. Shyams Ayurveda Centre), but still as part of a comprehensive healthcare offer

Right now, the policies and the investments made by the government are Current Track: focused on the hospitality and tourism sector. On this track, the cost of treatment its fairly high and, therefore, the cluster has to compete with Western countries.

Effect of change: by shifting track, the cluster will attract medical tourists who are looking for specific treatments outside of their home town and direct competition with cluster that offer low cost treatments would be avoided.

Environment Cluster Firm Policy Recommendation Policy Recommendations – Specific Areas of Interventions 30 There are multitudes of more specific policies the nation can consider to strengthen its international healthcare tourism, yet there are also barriers to overcome.

While UAE is very open for immigrant labor, it is moderately open towards refugees. The country is opening refugee camps in other countries, such as Jordan, Iraq and Greece. Refugees demand a significant amount of medical treatment. Rather than UAE buying these medical services in other countries where camps are opened, we believe that it is better for the healthcare sector that these Domestic services are bought inside of UAE instead, considering that the government is paying for treatments in its refugee centers located Refugee Centers abroad anyway. To achieve this, the country must adopt a more open policy towards refugees and open domestic refugee centers that rely on the capabilities of the cluster. This could potentially be unpopular among the citizens of UAE, however the power to achieve this is within the hands of the royal families. This would arguably also improve UAE´s political clout internationally.

This is possibly the hardest to achieve policy recommendation from this report. Not only would the different emirates have to agree on an agenda, they would also have to convince other countries to accept this agenda. Our policy recommendation is that UAE through international agreements lowers the cost for customers abroad to visit UAE for their healthcare purposes. Because the International population of UAE is so small, the domestic demand for healthcare services is smaller when compared to that of larger nations, Agreements which weakens the cluster. Therefore, UAE needs be diligent in attracting foreign customers, compared to some competing clusters. Furthermore, UAE is unable to compete on international healthcare tourism on cost with countries such as Thailand and sometimes even on quality with some European countries and north America. Therefore, specific agreements should overcome these issues.

As mentioned, the seven emirates are not always cooperating in harmony and sometimes there is tough competition for resources. Given this, it will take political willpower to have national cooperation between regions and hospitals within UAE. Our policy National recommendation is that as much advanced healthcare and research as possible and attempts for international healthcare tourism are Cooperation centralized to Dubai. This will increase cluster sophistication and therefore also international credibility. However, in general, it is Abu Dhabi - the richest, biggest and most politically powerful emirate - that would receive major responsibilities, such as healthcare treatment and research. Nonetheless, as Dubai is the center for tourism, we still believe that this is where the cluster should be.

From one of our interviews with a manager in the sector, we learned that a major challenge to healthcare tourism in Dubai is the difficulty for internationals to receive VISAs for their stay. The difficulty in this, however, varies depending on the visitor´s country Simplified of origin. Chinese visitors for instance are able to obtain VISAs typically under an hours process. Our policy recommendation is that VISA Process UAE strives to achieve similar agreements with other major economies such as Saudi Arabia, India, Germany, UK, US etc. This would lower barriers for customers and make potential healthcare visits to Dubai more attractive.

Environment Cluster Firm Policy Recommendation Policy Recommendations – Specific Recommendations in the Diamond Model 31

These broad and specific policies strengthen the four sides of the diamond in different ways and are interconnected .

National agreements for Dubai as center for healthcare increase domestic demand International agreements National agreements for Dubai as change industry structure center for healthcare reduce rivalry and have strategy implications International National Cooperation Agreements National agreements focus regional talents to the cluster Strategy, Rivalry & Structure

Factor conditions Demand Conditions International agreements increase international demand

Supporting & Relating Industries Refugee centers would become a new supporting industry Simplified VISA process Refugee centers increases demand from increase healthcare international customers Domestic Refugee service demand Centers

Simplified VISA Process

Environment Cluster Firm Policy Recommendation Policy Recommendations – A New Paradigm of Cluster Development 32 UAE is currently in budget deficit; although this cluster needs a lot of resources to succeed, UAE should perhaps pursue a more fiscally conservative budget in favour of lower cost policies.

Despite Dubai's growing importance in services, its quasi-public Debt restructuring entities suffer from high external (mainly short-term) debt. of government- Generally, the country is highly dependent on evolutions of related entities volatile, international energy prices and international proceeds, but Government trade, elements that are beyond its influence. refinancing spending has Budget The situation is projected to worsen in 2018, because of larger challenges remain. strengthened deficit is than ever spending plans. projected non-oil sectors Investing borrowed to be larger Our final policy recommendation for UAE includes a transition money holds inherent than ever from planned to a more spontaneous cluster plan. risk in 2018 Politicians and authorities should act as bridge builders in the region, linking existing resources rather than acting as investors by spending large amounts of public money. Basically, an approach more similar to Norway, another oil country; The Scandinavian country has rather invested than spent its oil money, creating the worlds largest sovereign wealth fund.

This approach would create long lasting, sustainable and self- sufficient clusters that will further diversify the UAE economy. We do not believe that large government cash injections are sufficient to mature this aspiring cluster. Rather, bridges must be built and policies, such as the ones we have recommended, should be adopted. Government investments will be long-term beneficial when the country budget balance is not in risk.

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