Special Economic Zones

Definition

Special Economic Zones (SEZs) are designated areas in countries that have economic laws different from the rest of the country. These zones are set up with the aim of attracting foreign direct investment.

Analogy

Think of SEZs as VIP sections in a nightclub. Just like how the VIP section has special perks and rules to attract high-paying customers, SEZs have different laws and regulations designed to attract businesses.

Related terms

Export Processing Zones (EPZ): These are types of SEZs where goods can be imported, manufactured, and re-exported without the intervention of customs authorities.

Free Trade Zones (FTZ): These are areas within a country where goods can be landed, handled, manufactured or reconfigured, and re-exported without the intervention of customs authorities.

Maquiladoras: These are factories in Mexico run by foreign companies that import raw materials on a duty-free and tariff-free basis for assembly or manufacturing and then export the finished product.