The UAE was a pioneer in harnessing the value of SEZs to attract foreign investment, driving growth in a more diverse range of economic activity with the launch of free zones in 1985. These free zones took advantage of mostly financial and non-financial incentives - which were unique in the region at the time.
With the development of such propositions, however, comes the need for a much deeper understanding of the comparative advantages needed for a sector (or even sub-sector) to ensure sustainable success of not just the one industry – but the economic outcomes for the host economy.
Ultimately, SEZs should be a catalyst or transitional tool towards the integration of economic activity within the base economy itself. In many cases, SEZs act as a “safe” pilot or proof of concept for institutional reform that can then be adopted in the host economy, removing the need for such zones and absorbing the full economic value of their activities.
In this edition of Inside AB, Jeremy Lawrence and Bernd Debusmann debate this topic, including the views of Anshu Vats, partner at Oliver Wyman, and his well-argued piece for Arabian Business on the subject of what freezones need to do to stay relevant.
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(Source: Arabianbusiness.com YouTube channel)