Why Dubai defaulted and what we should learn from it

Late last month Dubai World quasi-defaulted — and took the United Arab Emirates' credibility down with it. Will Dubai meet its obligations? As usual, it's the wrong question.

Dubai was a mini-U.S. — finance and real estate made up most of the economy. Both Dubai and the U.S. are discovering that the product of such economies is growth that's not only bubble-driven and prone to crashing, but also fails to create an authentically shared prosperity.

How can a country — or a company — seek a smarter kind of growth? Let's imagine a fictional counterpart to Dubai, one that has invested in smart growth. Here's what this Counter-Dubai might have focused on:

Ethics, not exploitation. Dubai's dark side was an invisible labor force that was, by many accounts, mercilessly exploited. Counter-Dubai would have been a haven for investment in people, bidding heavily for high-value skills, instead of importing low-skill workers.

Tomorrow, not today. Dubai invested heavily in building industrial parks for 20th-century businesses. What would have happened if Dubai had taxed industrial-era businesses and instead offered tax breaks and industrial parks for tomorrow's companies? It might have become Silicon Valley 2.0.

Governance, not corporatization. Dubai set up state-sponsored companies that were de facto instruments of the monarch. Counter-Dubai would have created better governance than in the U.S. or Europe.

Umair Haque is director of the advisory firm Havas Media Lab.