These are designated areas within a country where goods may be landed, stored, handled, manufactured, and re-exported, usually tariff-free and not subject to customs duties. This allows companies to import raw materials and components, manufacture products, and then export them without paying tariffs, making it an attractive location for international business. For example, Shenzhen in China was established as one of the first areas of this type and has become a major manufacturing and export hub.
The establishment of these zones can stimulate economic growth by attracting foreign investment, creating employment opportunities, and increasing exports. They can also facilitate the transfer of technology and management expertise to the host country. Historically, these zones have been used as tools to promote development and integrate countries into the global economy, particularly in regions with less-developed infrastructure or trade regulations.