Free economic zones (FEZs) is the first stage of economic integration

FEZs are the areas (parts) of the national state-owned territory where special favourable economic

Conditions, e.g., concerning customs, lease, tax, currency, labour, visa regulations, and the

Like are in effect for foreign and national entrepreneurs.

In the middle of the 1990s there were more than 4,000 different FEZs worldwide.

What are free economic zones formed for? Why have they become so widespead?

FEZs have a high degree of openness and attractiveness for foreign and domestic investors.

Apart from attracting foreign investments, FEZs allow to solve other problems that are particularly

important for any nation:

— encouragement of exports and supply of foreign currency;

— increase in employment;

— turning backward areas into a test-site of new principles of economic management;

— raising the standard of living in depressed areas, etc.

No doubt, FEZs are usually established for certain purposes and socio-economic programs to

Be realized.

Figure 21.1 shows the approximate FEZs classification in accordance icerEZ sceonmF with their purposes.

D

Trade

Industrial production:

Territorial and

Production areas

Technology

Introduction Services

t у r ' r ' r

Free customs areas

Bonded warehouses

Free ports

Free trade areas

Import substitution