# Dubai (1985 to 2004): a new system that brought prosperity

> From 1985 Dubai built something new: free zones with their own rules, where foreign companies could own 100% of their business, pay little or no tax and…

Source page: https://calankii.com/en/lessons/dubai/
Last checked: 2026-11-12
Publisher: Calankii (https://calankii.com)

## The starting point

Dubai is one of the seven emirates of the United Arab Emirates, formed in 1971. Its own oil was small compared with Abu Dhabi's, so it needed another way to grow ([History of the UAE](https://en.wikipedia.org/wiki/History_of_the_United_Arab_Emirates)).

## The wave it rode

World trade and finance were looking for a hub between Europe, Asia and Africa.

## What was new

- **Free zones.** The Jebel Ali Free Zone (Jafza) opened in 1985 with 19 founding companies next to the Jebel Ali port. Companies inside could be fully foreign-owned and pay little or no tax, without the whole country's law having to change first ([Arabian Business](https://www.arabianbusiness.com/industries/transport/jafza-at-40-how-massive-dubai-free-zone-went-from-19-companies-to-over-11000-to-become-trade-powerhouse)).
- **Its own courts.** The Dubai International Financial Centre (DIFC), set up in 2004, runs English-language courts based on common law, separate from the rest of the legal system ([Carnegie](https://carnegieendowment.org/sada/2017/05/dubais-alternative-judiciary)).

## How it brought people together

Investors chose to come; nobody was forced. Each zone offered clear rules, and people and companies moved there for them.

## How fast it grew

- Jafza grew from 19 companies in 1985 to about 11,000 businesses from 157 countries by 2025 ([Dubai Media Office](https://www.mediaoffice.ae/en/news/2025/may/05-05/hamdan-bin-mohammed-highlights-jafzas-significant-contribution-to-dubais-economy-over-4-decades)).
- The DIFC hosts more than 4,500 registered companies (same search, figure to be checked against the DIFC's own report).

## The result

The Dubai Media Office says Jafza and Jebel Ali port together account for about 36% of Dubai's economy ([Dubai Media Office](https://www.mediaoffice.ae/en/news/2025/may/05-05/hamdan-bin-mohammed-highlights-jafzas-significant-contribution-to-dubais-economy-over-4-decades)). Other estimates for the zone alone range from about 21% to 30% ([Gulf News](https://gulfnews.com/uae/z-for-zones-drivers-of-development-1.1937862)).

## Sources differ

Older figures give the zone's share of Dubai's economy as 21% to 24%; the 36% figure combines the zone and the port.

## What critics record

The UAE has no elected national institutions and has been rated "Not Free" by Freedom House every year since 1999. The kafala sponsorship system ties migrant workers to their employers ([United Arab Emirates](https://en.wikipedia.org/wiki/United_Arab_Emirates)). The DIFC courts create a two-tier legal system ([Carnegie](https://carnegieendowment.org/sada/2017/05/dubais-alternative-judiciary)).

## What it shows for Somalia

Clear rules in one place can draw investment fast, without waiting for the whole country to agree first. Many Somalis already live and trade in Dubai and know this model from the inside.

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