Investigation of Resiliency and Efficiency of Free Zones by Using DEA

Abstract

From the perspective of local economic development, on the one hand, free zones increase trade and attract some necessary technical and capital expertise and therefore, lead to the economy dynamics. On the other hand, the resiliency of these areas causes free zones to observe less fluctuation over time and will suffer less damage. Today, the concept of efficiency and effectiveness is one of the things to be taken noticed by many economists. Therefore, using the indices of Burman et al. (2013) and Briguglio (2003) and window analysis, this paper is to investigate the resiliency and efficiency of Iranian free zones. Accordingly, using the resiliency indices of Burman et al. (2013) and Briguglio (2003), free zones of Kish, Qeshm, Chabahar, Anzali, Arvand, and Aras over the period of 2011–2015 are evaluated. Results indicate that most free trade zones have not operated in accordance with the resiliency based on the sub-indices of exports rate, imports, ratio of exports to total, trade balance, foreign and domestic investment, employment, income, and the number of registered firms. Results of the DEA indicated that the only free zone is Anzali which was functioning efficiently. Therefore, it is recommended that the government provides conditions for attracting foreign and domestic investment through giving tax incentives, refining laws, custom taxes, etc. The re-export of imported goods can be effective in improving performance in these areas.