PRIORITIZATION EFFECTIVE FACTORS ON SITE SELECTION FOR IRANIAN FREE TRADE ZONES USING ANALYTICAL HIERARCHY PROCESS

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1 Proceedings of nd International Conference on Social Sciences Economics and Finance Held on th - 8 th Aug, in Montreal, Canada, ISBN: PRIORITIZATION EFFECTIVE FACTORS ON SITE SELECTION FOR IRANIAN FREE TRADE ZONES USING ANALYTICAL HIERARCHY PROCESS Niloofar Ashktorab Department of agricultural economics, college of agriculture, Shiraz University, Iran. PhD student of Agricultural Economics. Mansour Zibaei Department of agricultural economics, college of agriculture, Shiraz University, Iran Professor of Agricultural Economics. Negar Ashktorab Department of Management, Shiraz Branch Islamic Azad University, Shiraz, Iran. MSc. Student of industrial Management. Abstract: In Regional planning and land development, identifying suitable region for the establishment and development of economic activities is a major issue. The basic approach for site selecting of each activity such as tourism development, factories, etc. is to consider some factors which are limiting. For free trade zones, this rule has no exception. free zones for entrance in world markets and taking advantage of the relative superiority of domestic economy in international trade are very essential and important. The main aim of this study is to prioritize the social and economic measures affecting site selection of Iranian free trade zones using Analytical Hierarchy Process (AHP). Results showed that and free trade zones have the first rank according to economic criteria such as attracting investment, healthy and productive employment, active participation in global and regional markets and so on. And also, according to the Development and promotion of tourism and holding conference factors gain the first rank. Key words free trade zones, ranking, global market, Analytical Hierarchy Process (AHP). Ι. INTRODUCTION In Regional planning and land development, identifying suitable region for the establishment and development of economic activities is a major issue that has been faced by regional planners. Nowadays, policy makers in developing countries widely recognized the fact that site selecting of services and infrastructure facilities plays an important role in development of the cities []. Site selection is one of the important issue in all activities such as services and manufacturing. The suitable location for business activities, is one of the basic elements in the success or failure of the firm, which can be a strategic tool in order to grow market share and increase firms profit. In site selecting, in addition to good access also competitive power and market demand should have been considered []. The basic approach for locating each activity such as tourism development, factories, etc. need to consider a variety of limiting factors such as slope, height, etc. and also reinforcing factors such as access to resources, roads, markets []. Free trade zones can enter technology and capital management into the country and also aggregate domestic factors with technical science and set the country in development path in line with global 9

2 Proceedings of nd International Conference on Social Sciences Economics and Finance Held on th - 8 th Aug, in Montreal, Canada, ISBN: economy. Free trade zones are strategic tools for entering world markets and using relative advantages of domestic economy in international []. The main purpose of establishing free trade zones in the country is accelerating economic development, increase public revenue and attracting investment, create public and heathy employment, adjusting labor and good market, participate in global and regional market, produce and export of industrial and processed goods and presenting public services. Since9, due to increasing international trade, some Iranian ports in Persian Gulf and also in Caspian Sea have been chosen to be free trade zones.so the aim of this study is to evaluate the location of Iran s free trade zones due to social and economic factors. So all free trade zones in Iran are identified and effective criteria related to these zones are evaluated. Huang et al. () he who used the AHP in the fuzzy environment to compare eight important East Asian ports from the competitive point of the goods attraction. Nooramin (9) as another study on the trucks trafficking matter in the containerized terminals by manipulating the multiple index decision making and AHP solution suggestion tried to represent the most optimized and performable crane for the trucks discharging and loading in the terminals and also in the second phase he suggest the most optimized and performable port s performance method for trucks trafficking reduction. Onut et al. () model shopping center site selection problem for a real world application in Istanbul, Turkey. The paper proposed a combined MCDM methodology. Fuzzy AHP was utilized for assessing weights of the criteria for site selection and fuzzy TOPSIS was used to determine the most suitable alternative using these criteria weights. As a result of the study, they find that the proposed method is practical for ranking alternatives with respect to multiple conflicting criteria for the large scale problems. Gheysori () Aimed to Identify and prioritize influencing Factors in attracting logistics centers in seaports by using Analytical Hierarchy Process Model. In the study 9 main factor and sub factor in attracting the logistics centers in seaports were extracted by enjoying the expert s viewpoints and reviewed previous research. the results of this research showed that all the main factors and sub-factors have the different importance and priority in attracting logistics centers. Between the main Factors Technology/Information (A) gained highest important and priority and land and land prices (I) gained lowest. II. IRANIAN FREE TRADE ZONES In this study, we are selecting all free trade zones in Iran and after identifying effective factors, evaluate them. free trade zones in Iran are: A. effective factors on site selection of Iranian free trade zones different factors affect suitable location for free trade zones. After consulting with experts and evaluating various studies and theories related to free trade zones, following criteria in order to locate suitable zones were extracted.. tourism development and promotion. exhibitions and Conferences. increasing manufacturing industry and export processing. Transit and Storage. The fuel supply. attracting investment. healthy and productive employment 8. provide engineering and technical services 9. active participation in global and regional markets III. METHODOLOGY With a view to the objective, the present study is an applied research as its results can be useful for site selecting of free trade zones. Taking into consideration the type and nature of the problem, objectives and questions try to lead the study on the descriptive mood on which manipulate Analytic hierarchy process for the prioritization and identification of the effective factors that are important for site selecting of free trade zones. B. Analytic Hierarchy Process (AHP) AHP decomposes the complexity in the form of a simple hierarchy, descending from overall goal to criteria, sub-criteria (if exist) and alternatives allocates relative weights of criteria and sub-criteria to compare the alternatives. The basic principles of AHP can be summarized as defining and determining the problem; decomposing the problem in a hierarchy from top through the intermediate levels; constructing a set of 9

3 Proceedings of nd International Conference on Social Sciences Economics and Finance Held on th - 8 th Aug, in Montreal, Canada, ISBN: pair-wise comparison matrices; testing the consistency index; synthesizing the hierarchy to find out the ranks of the alternatives. AHP makes use of pair-wise comparisons to simplify the judgment process with -9 ratio scaling (see Table ). Table. THE PAIRWISE COMPARISON SCALE Intensity of Definition Explanation importance Two activities Equal importance contribute equally to the objective Experience and Moderate judgment slightly importance favour one activity over another Experience and Strong judgment strongly importance favour one activity over another An activity is favoured very Very strong or strongly over demonstrated another; its importance dominance demonstrated in practice The evidence favouring one 9 Extreme activity over another importance is of the highest possible order of affirmation,,,8 Intermediate values When it is assumed (A, A, An) is any set of n elements than a sample of square matrix can be produced as below by pair wise comparisons of each element. Here, each (Ai, Aj) judgment represented as aij. Because aii= for all i diagonal of the matrix contains entries of. ( ) When (w, w,,wn) are the elements corresponding weights; the dominance of an element in the row over the element in the column represented as wi/wj. AHP method compares the related weights of each element in a set with respect to the goal. The general form of comparison matrix of AHP is given as follows, ( ) Than the problem turns in to general process to calculating the largest eigenvalue corresponding to eigenvector to assess the Consistency Index (C.I.) where A is the matrix, x is the eigenvector and λ is the eigenvalue. When we divide C.I. by the random consistency number the final value must be less than.. max n CI Super decision n software which is a professional for AHP analysis matters is used to collect and analyze the research data. The study material on which used in this research for collecting the data is the questionnaire that is performed orally either by phone of face to face. The reliability of the questionnaire on which consider the pair comparative of the factors and the subfactors for the free trade zones is highly dependent on the AHP. According to the theoretical principles of the AHP, the designed questionnaire reliability is detected by the consistency index of the pair comparative tables. Due to this, if the consistency index of the pair comparative tables was less than., the designed questionnaire is considered reliable. Thus the designed questionnaire is reliable because its consistency index in all of the tables approved under the. []. IV. RESULTS The hierarchical process tree is generated by the nine main factors on which are effective on the site selection of free trade zones and seven subfactors which are free trade zones. In the first level, the goal (prioritization the effective factors on the site selection of free trade zones in Iran) and in the second level the main factors and finally on the third level the subfactors are represented and displayed. Results are shown in tables () to (). Consistency Index (C.I.) for the pair comparative of effective factors on the site selection of free trade zones is.8 which is less than.. it states the consistency of 98

4 Proceedings of nd International Conference on Social Sciences Economics and Finance Held on th - 8 th Aug, in Montreal, Canada, ISBN: comparisons. Due to table (), active participation in global and regional markets has the first priority among effective factors on the site selection of free trade zones from economics and management experts vision. increasing manufacturing industry and export processing and attracting investment are in the second and third priorities, respectively. These two factors are affected by increasing manufacturing industry and export processing. Economic factors have higher weight than other factors for site selection of free trade zones. Table. Calculation of Criteria with AHP weig ran factors ht k active participation in global and regional. markets increasing manufacturing industry and export processing attracting investment..8 provide engineering and technical services.8 healthy and productive employment. The fuel supply. Transit and Storage. exhibitions and Conferences. 8 tourism development and promotion. 9 Consistency Index for comparing alternative according to tourism development and promotion is.9 and for exhibitions and Conferences is.9, both Consistency Index show the consistency of comparisons. tables () and () show that among other free trade zones has the highest weight due to tourism development and promotion and also exhibitions and Conferences criteria. According to experts decision, is the last priority for the tourism development and promotion factor and also is in the same position for exhibitions and Conferences factor. Table. Calculation of Alternatives Weights According to Tourism Development and Promotion with AHP Free trade zones weights rank Table. Calculation of Alternatives Weights According to Exhibitions and Conferences with AHP Free trade weight zones s rank Consistency Index for comparing free trade zones according to increasing manufacturing industry and export processing criterion is.9 which is shown the consistency of comparisons. Factor increasing manufacturing industry and export processing is important from economic dimension lead to increase healthy and productive employment. and, are in first and second priorities respectively and is ultimate one. Table. Calculation of Alternatives Weights According to Increasing Manufacturing Industry and Export Processing with AHP

5 Proceedings of nd International Conference on Social Sciences Economics and Finance Held on th - 8 th Aug, in Montreal, Canada, ISBN: In tables () and (), consistency index are less than.. results show that in both table is first and is last priority. Free trade zone is in the second priority due to Transit and Storage factor and according to fuel supply has the second rank. Table. Calculation of Alternatives Weights According to Transit and Storage with AHP Table. Calculation of Alternatives Weights According to the Fuel Supply with AHP In tables (8), (9) and (), consistency index is less than.. results show that the first priority of attracting investment factor is free trade zone and the first priority of healthy and productive employment and provide engineering and technical services is. Table 8. Calculation of Alternatives Weights According to Attracting Investment with AHP Table 9. Calculation of Alternatives Weights According to Healthy and Productive Employment with AHP Free trade zones w eights rank Table. Calculation of Alternatives Weights According to provide Engineering and Technical Services with AHP Consistency index is.. due to active participation in global and regional markets in table (), has the highes weight among all the free trade zones in Iran.,,, and are priorities to, respectively. Table. Calculation of Alternatives Weights According to Active Participation in Global and Regional Markets with AHP

6 Proceedings of nd International Conference on Social Sciences Economics and Finance Held on th - 8 th Aug, in Montreal, Canada, ISBN: Results show that and free trade zones have the first rank in economic criteria such as attracting attracting investment, active participation in global and regional markets and healthy and productive employment. Also,, free trade zone due to factors like attracting investment and exhibitions and conferences is the first priority. Other selected free trade zones such as,, and aren t the first priority for any one of factors, it can be related to the short time of their membership in free trade zones in Iran. Among these zones, and according to active participation in global and regional markets, healthy and productive employment and providing engineering and technical services have better condition than and. VI. Conclusion For optimal allocating the resources due to results, following offered:. Attracting domestic and foreign investment.. Regulate and simplify the rules for ensure the economic safety of the country. Establishment and strengthening the infrastructure such as road transportation and building construction. Expanding banking activity, insurance and creating capital market. Attracting tourist to enhance higher revenue REFERENCES [] A. R. Roknedin Eftekhari, and H. Izadi Kharame, Analyzing Approaches to locating and the distribution of services in rural areas: comparative analysis approach in developing urban functions, Journal of Geographical Research, paper NO. 8, pp. -,. [] E. W. L. Cheng, H. Li and L.Yu, A GIS approach to shopping mall location selection, Building and Environment, vol, pp ,. [] A. R. Roknedin Eftekhari, H. Vojdani Tehrani and A. A. Razini, Evaluation the priorities of free trade zones in Iran by using MADM, Journal of Humanities lecturer, vol (), 8. [] S. Önüt, T. Efendigil, and S.S. Kara, A combined fuzzy MCDM approach for selecting shopping center site: Anexample from Istanbul, Turkey. Expert Systems with Applications, vol., pp. 9 98,. [] T. L. Saaty, How to make a decision: the analytic hierarchy process. Interfaces, vol. (), pp. 9-, 99. [] FM. Cutrer, PJ. Goadsby, MD. Ferrari, RB, Lipton, [] DW. Dodick, D. McCrory and P. Williams Priorities for Triptan Treatment Attributes and the Implications for Selecting an Oral Triptan for Acute Migraine: a Study for US Primary Care Physicians, Vol., pp. -,. [8] C.I. Liu, H. Jula, K. Vukadinovic and P. Loannou, Automated guided vehicle system for two container yard layouts ; Transportation Research Part C: Emerging Technologies, Vol., pp. 9-8,. [9] C. Parkan, M. Luwu Decision making and performance measurement models with applications to robot selection, computers & Industrial Engineering, Vol., p. -, 999. [] M. Sadeghi, and A. Ameli, An AHP Decision Making Model for Optimal Allocation of Energy Subsidy among Socio-Economic subsectors in IRAN, Energy Policy, vol., pp. -,. [] C.H. Yeh, and Y. L. Kuo, Evaluating passenger services of Asia-Pacific international airports, Transportation Research part E: logistics & Transportation Review, Vol. 9, pp. -8,.