Breaking barriers: investigating the effects of 100% foreign ownership on business entry in Dubai

Purpose The primary objective of this study is to scrutinize the impact of recent policy reforms in the UAE, particularly focusing on the deregulation of business ownership laws. This deregulation represents a significant shift in economic policy, aiming to attract more foreign direct investment (FDI) and stimulate private sector growth. The study seeks to understand how these changes affect the entrepreneurial landscape in the UAE, specifically evaluating the immediate response in terms of new business registrations. Design/methodology/approach This study employs a robust empirical approach by leveraging a unique dataset encompassing a comprehensive range of business activities in Dubai. The dataset includes monthly records of newly issued business licenses, providing a granular view of entrepreneurial activity in the wake of policy changes. A difference-in-difference analytical framework is utilized, comparing the trends in business registrations before and after the policy implementation. The model involves a treatment group, which includes sectors directly affected by the liberalization policy, and a control group, comprising sectors that were not impacted. This approach allows for the isolation of the effects attributable to the policy change from other external factors. Findings Our analysis reveals a marked increase in the number of new business licenses post-liberalization, particularly in sectors directly impacted by the ownership deregulation policy. This surge indicates an immediate positive response from the business community, signifying increased confidence and willingness to invest in the UAE. The sectors showing the most significant growth include those previously restricted to foreign ownership. Originality/value This study provides initial evidence that the liberalization of business ownership rules in the UAE has a positive effect on new firm registrations. The findings underscore the importance of regulatory reforms in creating a conducive environment for foreign investment and entrepreneurship. This study’s insights suggest that similar reforms in other GCC countries could stimulate economic diversification, foster innovation and contribute to sustainable economic growth. The UAE’s initiative could serve as a model for other regional economies seeking to enhance their attractiveness to foreign investors and entrepreneurs.