Patrick Schwerdtfeger is a motivational speaker who can speak about different countries and the varying economic advantages they are endowed with at your next business event. Contact us to check availability. The full transcript of the above video is included below.
Full Video Transcript:
Hey, this is Patrick and welcome to another edition of Strategic Business Insights. Today we’re going to talk about nontraditional subsidies. Different countries all around the world have different types of subsidies that they can take advantage of. And right now I’m here in Dubai – this is the Burj Al Arab Hotel right behind me. It’s the only seven-star hotel this time in any case in the world.
So let’s look at some of these subsidies, and let’s go back to the United States. In most developed countries around the world—Canada, Europe, Japan, Australia—governments tax gasoline significantly. So there’s a lot of tax in gasoline, so as a result of that people have to pay more for the gasoline that they use. In other words, they have to pay more for energy. While in the United States, the government doesn’t tax gasoline nearly as much, so gas is quite inexpensive in the United States. Well, that’s a subsidy. That’s a subsidy for not just businesses in the United States, but anyone who lives in the United States they get that subsidy. They can buy energy for less expensive in the United States than they can in other countries. So that represents a subsidy that they can take advantage of.
Well, here in Dubai, they also have different subsidies that they can take advantage of. They’ve got incredible construction that’s taking place here, and the fact is that the wages that people have to pay for these construction workers—many of the construction workers come from North Africa, they come from India, they come from Pakistan, other areas in the Middle East—the wages are much lower than they would be in other developed nations like Europe, the United States, Canada, where the minimum wages are higher, so you have to pay much more. So the development cost of building something here in Dubai like the Burj Al Arab is much lower than it would be in other parts of the world, and so there’s a subsidy, and they’re building like crazy and it’s much less expensive for them to do that here than to do it in other parts of the world.
Here’s another example. The United States, Europe, Canada, Australia, certainly Japan, Russia as well, all have a lot of older people in their economy, people who are over the age of 65. Well, that is the opposite of a subsidy because productive wages from people who are earning a living, part of that money that they earn, again, across the entire economy, has to go to subsidizing and paying for those older folks who are retired and no longer productive.
While in the Middle Eastern countries—India, Pakistan, Middle East, North Africa—there aren’t a lot of older people in the economy. In fact, there’s an incredible youth bulge. A youth bulge is a lot of younger people. There aren’t a lot of older people. So that’s another form of subsidy for their entire economy, because a higher percentage of the wages that are earned can go towards development, consumption and so forth within the economy. So it represents a subsidy.
So it doesn’t matter where you go in the world, you’re always going to find that different countries have different advantages, circumstances that act as subsidies for them to develop or not develop as the case may be. Here in Dubai, they have a number of things going for them including an exploding population, a massive trade surplus because they’re selling oil—Dubai doesn’t have that much oil but the region does. So Abu Dhabi, certainly Saudi Arabia, Bahrain, even Oman and Qatar, Iran, Iraq of course, Kuwait – they all have a lot of oil. So the trade surplus brings a lot of money in and a lot of that money goes into the public sector. So the government has a lot of resources. Those public resources can go towards developing the roads, the general infrastructure, and again, it acts as another subsidy.
So I encourage you to when you’re looking at international business, different countries that you might want to participate in or visit, so understand the bigger picture of what’s actually going on. Does this country have an advantage or a disadvantage when it comes to development, when it comes to their own economy? What’s going to happen in the future? A lot of these things you can tell just by looking at the population or the circumstances that the country finds itself in.
Once again this is Patrick. Thanks so much for watching. Patrick reminding you to think bigger about your business, think bigger about your life.
Video Description on YouTube
Patrick Schwerdtfeger discusses the impact of local circumstances on real estate development and economic expansion. As an example, the United States doesn’t tax gasoline nearly as much as most other developed nations, resulting in an effective “subsidy” for businesses operating in America. Well in Dubai, energy is inexpensive there as well but that isn’t the only economic advantage they have. The Middle East also has a very young population with very few older retired people. They have lax minimum wage laws, allowing real estate developers to hire migrant workers for very little money. They also have oil which results in a huge amount of resources going into the public sector. That allows the local governments to invest in good roads and sewage facilities and airports. These factors all amount to a significant economic advantage afforded to UAE businesses.
This video was recorded in front of the Burj Al Arab, the world’s only 7-star hotel. This amazing facility, along with countless others, is a perfect example of the real estate development that results from these economic subsidies. Dubai, along with neighboring cities like Abu Dhabi, Doha in Qatar and Riyadh in Saudi Arabia, is developing at record speech, facilitated by growing oil revenues and an economic environment very favorable to economic activity.
NOTE: Patrick Schwerdtfeger is a keynote speaker who covers topics surrounding the Middle East and in particular, how western nations should interact with the Muslim World.
Patrick Schwerdtfeger is a keynote speaker who has spoken at business conferences in North America, South America, Europe, Africa, the Middle East and Asia.