Conference Paper
The Effect of Flexible Ownership Regulations on Foreign Investments in the UAE: An Impact Evaluation Study Using a Quasi-experimental Method
No.
ERF29AC_9
Publisher
ERF
Date
May, 2023
Entrepreneurship can support economic growth and create jobs. Regulatory and policy restrictions on entrepreneurs starting new business are widely considered an impediment to entrepreneurial activity. The United Arab Emirates has recently deregulated the ownership rules for more than 1,000 commercial and industrial activities allowing full ownership of commercial companies in UAE (without requiring a partnership with a national sponsor). Before the introduction of these amendments, foreign ownership is not permitted to exceed 49% of the total assets of a company outside the free zones with the majority stake being held by an Emirati partner. This study represents the first attempt to assess the short-term impact of the liberalization of business ownership rules on the number of newly registered firms in the UAE. The study collects unique data that covers all types of business activity in Dubai. Monthly data on the number of new issued business licenses in Dubai has been used. We develop a difference-in-difference model with a treatment and a control group using panel data regression models. Our finding suggest that the liberalization of the ownership rules have led to a significant increase in the number of new business licenses on the sectors that were impacted by the liberalization policy by more than 170%. This early evidence may suggest relaxing the restrictions on business ownership may stimulate the entrepreneurial activity and economic growth in the Gulf region.
Research Fellows
Ahmed Rashad
Assistant Professor of Economics, Anwar Gargash Diplomatic...