Dubai Government

Assessing the Economic Linkages between Free Zones and Dubai Main

December 2, 2012

Author: Mahmoud Al Iriani, Ibrahim Elbadawi and Dhuha Fadh
Classification: Working Papers

Abstract

Using firm level data based on a representative sample of more than 700 firms generated by the Dubai Economic Council’s “Enterprise Level Survey 2010”, this paper analyzes the capacity of firms located in Dubai free zones to create economic linkages with the main economy of Dubai. Conditional on firm characteristics and sectorial specialization and relative to the reference location of Dubai Main, we find that the free zones have performed well in terms of linkages to upstream production chain, labor market and the banking sector in Dubai main. Except for the case of Jebel Ali Free Zone Authority with regard to sourcing of local inputs, firms located in the free zones have similar or better linkages capabilities than their counterparts in Dubai Main. Our findings motivate three main policy implications, where public policy interventions might be effective in further enhancing the backward linkage capabilities of the Free Zones in Dubai.