The next generation of economic zones will compete on ecosystems, not incentives

When the UAE began developing its free zone model, the proposition was relatively straightforward: businesses could establish themselves in a supportive regulatory environment, benefit from efficient processes and gain access to infrastructure and international markets. Over time, however, the most successful zones have developed into much broader business ecosystems, and that evolution offers useful lessons for markets seeking to attract international investment.

JAFZA is a good example of this development because its success has always been closely connected to the ecosystem around it. Its proximity to Jebel Ali Port, international connectivity and concentration of businesses have created an environment where companies can access suppliers, customers, logistics services and other businesses within the same wider network. The value of that environment extends well beyond any individual incentive available to a company.

The same principle can be seen across the UAE’s specialised economic zones. Dubai Internet City developed around technology and digital businesses, while Masdar City created an environment focused on clean technology and sustainability. Other zones have developed around sectors including healthcare, manufacturing, media and financial services. Their common feature is that they have been designed around the practical requirements of businesses and the ecosystems needed to support those businesses as they grow.

This is becoming increasingly important as international investment decisions become more sophisticated. Taxation, regulation, infrastructure and operating costs remain fundamental considerations, but companies are also looking closely at the environment surrounding an investment. Access to talent, professional and financial services, reliable partners, efficient movement of goods and capital, and connectivity to neighbouring markets can all have a significant impact on the viability of a business over the long term.

An economic zone can therefore offer attractive incentives and still struggle to develop a sustainable investment ecosystem. Conversely, a well-connected zone with strong institutions, infrastructure and business services can become increasingly valuable as more companies establish themselves there, creating a network in which businesses benefit from both the underlying infrastructure and from the presence of other companies operating within the same environment.

This thinking has particular relevance for South Asia, currently the fastest-growing region in the world, with substantial population, talent and growing consumer and business markets, as well as longstanding commercial connections with the Gulf. The next phase of that relationship will require not only greater movement of capital between the two regions, but also stronger institutional infrastructure through which international businesses can establish operations and participate in regional growth.

For international companies entering South Asian markets, establishing the right structure, finding reliable partners, accessing professional services and navigating different regulatory environments can add complexity to an investment decision. Economic zones can play a valuable role in reducing some of that friction when they are designed around enhancing the ease of doing business.

Sri Lanka provides an interesting example through Port City Colombo, which is seeking to develop an international business and investment platform connected to Sri Lanka, South Asia and global markets. Its long-term relevance will depend on execution, including the quality of its regulatory environment, the businesses it attracts, access to talent and professional services, and the commercial relationships that develop around the platform. These factors will ultimately determine how effectively it develops from a physical development into a functioning business ecosystem.

There is also a broader opportunity for stronger connections between established Gulf ecosystems and emerging platforms across South Asia. The UAE has spent decades developing environments that allow international companies to establish regional operations and connect with markets beyond the country itself. As Gulf businesses, family enterprises and investors increasingly look towards South Asia, platforms that can provide a more structured way to enter and operate in the region will become increasingly relevant.

Port City Colombo is beginning to demonstrate how this proposition can take shape in practice. What started as a major urban development has evolved into a dedicated Special Economic Zone with an established regulatory commission, a single window investment facilitation framework and a growing base of international businesses. In the first half of 2026 alone, 71 Businesses of Strategic Importance were approved, representing more than $600 million in new investment. Recent cross-border engagement, including a partnership with Umm Al Quwain Free Trade Zone, points towards the kind of institutional relationships that can connect the platform to established Gulf ecosystems over time.

The more relevant question is not whether a development of this scale can attract initial investment, it clearly can, but whether it can develop the wider ecosystem that makes it genuinely useful to the businesses operating within it. That depends on the quality of the regulatory environment, access to talent and professional services, and the network of businesses that builds around the platform over time. Those are the factors that have determined the long-term relevance of the UAE’s most successful economic zones, and they are the same factors that will determine whether emerging South Asian platforms can become credible gateways for international capital.

The next generation of economic zones will therefore need to think carefully about the ecosystems they are building. Physical infrastructure and regulatory clarity remain essential, but the strongest platforms will increasingly be those that bring together professional services, talent, technology, capital and sector expertise while connecting businesses to ports, airports, financial centres and neighbouring markets.

This is one of the lessons that can be drawn from the UAE’s experience. The country’s economic zones have remained relevant because the proposition around the businesses operating within them has continued to become broader and more sophisticated. The focus has expanded from providing an efficient place to establish a company towards creating environments in which businesses can build relationships, access markets and grow.

South Asia now has an opportunity to apply those lessons within its own context. For Gulf investors and businesses assessing emerging platforms in the region, the quality of the wider ecosystem, the markets it can connect to and the opportunities it can create over the long term may ultimately matter as much as the incentives available at the point of entry.

Dr Adil Alzarooni is a UAE-based specialist in economic zone development, family business sustainability and investment strategy