Flip through the latest issue of Gulf Weekly.
The story of Walter Boyd, an ambitious young Scottish businessman determined in the early 1780s to cut a figure on a larger stage, illustrates how money moved in the late 18th century.
London, Paris and Amsterdam were at that time the three great international financial centres upon which Europe's trade depended, says Professor Youssef Cassis, a leading financial historian, in his book Capitals of Capital. Where would Boyd seek his fortune? He opted for Paris and settled there in 1785 and in the space of a few years became one of the most influential bankers, but had to flee to London in 1792. After brilliant initial successes in issuing loans for the British government, he went through some difficult years eventually recovering his fortune only after Waterloo. Boyd's route illustrates fairly well the changes that occurred within the leading financial centres during the French wars as well as the new international hierarchy that formed at the beginning of the 19th century - the pre-eminence of London, the resurgence of Paris, which emerged as the second major market and the eclipse of Amsterdam.
Even today London is the leading financial centre globally relegating New York to the second position in the The City of London Corporation's Global Financial Centres Index (GFCI) that evaluates the competitiveness of 46 financial centres worldwide. London and New York are well ahead of the two strongest Asian centres of Hong Kong and Singapore which occupy 3rd and 4th places respectively.
In the Middle East, Dubai has retained its position as the leading financial centre. The emirate also came in first out of five global cities that were singled out as likely to become "significantly more important" over the next two to three years.
GCC financial centres have recorded significant ratings increases in the third GFCI, Dubai was identified as a key and growing regional hub, while Bahrain and Qatar experienced the biggest jump in the ratings, by 59 and 51 points, respectively. Dubai's rating increased by 10 points, moving it into 24th position globally. It was a 15-point jump in ratings since the first report was published in March last year.
Bahrain is the world's fastest growing financial centre. Bahrain is in 39th place, up three from the previous edition, and ahead of neighbouring Qatar. It also overtook Mumbai (48), Beijing (46) and Johannesburg (41).
Of the Gulf states covered by the report, Dubai slipped two places to 24th and Qatar is down three at 47th.
Dubai International Financial Centre's chief economist Nasser Saidi attributes Dubai's emergence as a world-class financial centre to several factors, mainly due to investment in the infrastructure of the financial markets.
Bahrain and Qatar, which initially failed to enter the top 50 GFCI ranking in March last year, have improved their performance since September.
The ranking is a global vote of confidence, says Bahrain Economic Development Board chief executive Shaikh Mohammed bin Isa Al Khalifa.
"Bahrain's rise to prominence in the index reflects both our continued investment in our finance sector and our ability to attract finance business to the kingdom. We are recognised as the most business-friendly and cost-competitive centre in the Gulf," he says.
Dubai's position among the world's top centres is a sign of growing importance of the Gulf as a whole on the global financial stage, thanks in part to high oil prices and huge government investment.
Cities that are financial centres face greater competitive forces than most, for the financial services industry is at the heart of the global economy, acting as the facilitator of world trade and investment.
Financial centres are assessed in terms of five key competitiveness areas: people, business environment, market access, infrastructure and general competitiveness.
The GFCI shows that you need to be good at most things to be a leading centre. London and New York are in top quartile of over 80 per cent of the instrumental factors in which they feature. Looking at London specifically, it is in the top quartile in 36 out of the 43 instrumental factors. So far, where London is weak, for example operating costs, these factors can be seen as problems of success. It is interesting to see that Dubai and Shanghai are already matching established centres such as the Channel Islands and Hamilton. Dubai has clearly focused on attracting regional business, while Shanghai has been the focal point for its domestic business. As their financial services broaden and deepen, The GFCI expects these two centres to move towards the "leaders" box.
However, Dubai has a steep hill to climb before it can become an established financial centre like New York or London. Its new international stock market, the Dubai International Financial Exchange, lists just 12 companies.
