FZW talks with Dr Fabio Scacciavillani about financial free zones and GCC trade
What economic and regulatory conditions were most responsible for the success of Dubai International Financial Centre (DIFC) and NASDAQ Dubai in growing the city’s profile as a global finance leader?
First of all, it was crucial the commitment by the authorities to passionately support the creation of a world class financial center in an area which had accumulated an enormous wealth but had a limited capacity to effectively deploy it. Second, the determination to set up a jurisdiction which could blend the best international practices and the most apt regulatory framework. In order to separate the legal framework of the DIFC from that of the UAE the Constitution was amended.
Finally, the offer of a state of the art infrastructure in one of the fastest growing cities in the world, which was attracting talent from all over the world thanks to an open and liberal attitude to business and trade.
To what extent do you see the financial free zone model as repeatable in places like Istanbul, Buenos Aires, or Lagos?
The model in theory can be copied, but it is extremely arduous. Few countries have the ability to carve out a jurisdiction where the legal framework is analogous to the Anglo-Saxon model that pervades the largest international financial hubs like London, New York and Hong Kong. Furthermore, political and security instability does not bode well for the attraction of large financial institutions and top notch professionals. Finally, the authorities must be credible in the eyes of financial institutions and investors. Countries with a history of corruption and mismanagement do not qualify.
How could broadening trade liberalisation in Asia, Europe, and Africa affect the economic outlook of the Gulf Cooperation Council (GCC) countries?
The push towards trade liberalisation has stalled. Today the protectionists have grown increasingly vocal and international trade volumes have dropped after two decades of vigorous growth. The election of Donald Trump casts doubts over future developments. However, I expect that the genie of globalisation cannot be pushed back into the lamp: those areas which enjoy a favourable geographical position, like Oman, or have a commitment to free trade, like the GCC, will be better positioned to reap the benefits of the next industrial revolution and technological advances.