Are restrictions on foreign ownership counter-productive? Evidence from Dubai, United Arab Emirates
by Azzeddine Azzam, Belaid Rettab
International Journal of Economic Policy in Emerging Economies (IJEPEE), Vol. 4, No. 1, 2011

Abstract: The purpose of this paper is to estimate productivity gaps between firms with different shares of foreign equity in the presence of government restrictions on foreign ownership. Dubai, having such restrictions, and having multiple ownership structures within co-existing onshore and off-shore territories, provides a rich setting for examining the effect of alternative Foreign Direct Investment (FDI) regimes on productivity. What we find is that firms subjected to the 51/49 rule of ownership lag in productivity mostly in one sector of the economy. An implication of our results is that any move to reform the 51/49 rule should probably be sector-specific rather than across-the-board.

Online publication date: Sun, 11-Jan-2015

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