Free Economic Zones in Transition Economies and Its Impact of Economic Essay

Free Economic Zones in Transition Economies and Its Impact of Economic Development of a Country - Essay Example e areas of a certain national economy where the government has put up a special system of opportunities and benefits that are not available to other areas of the country.3 These zones are also referred to as â€Å"islands† or â€Å"windows† wherein foreign investments and technologies are presented to a country. They are an example of an â€Å"open door† policy.4 Another definition of FEZ presents it as a part of a country’s territory wherein goods are being looked at as something that does not fit the limits of national customs territory; thus, they are not under common customs control and taxation, according to the Kyoto Convention. Hence, products being entered through the FEZs are not subjected to any trade barriers. The Ministry of Finance and Economy of Korea also gave their own definition, stating that FEZs are self-sufficient areas that provide wide-ranging services.5 Consequently, the Free Economic Zone Law defined FEZ with Article 23 as â€Å"th e zone, which is developed with the aim of improving the business environment for foreign-invested enterprises and the living conditions for foreigners†. Thus, an FEZ is a special area where exceptional measures are practiced. Moreover, it is a specific area which offers an optimal business and living environment to foreign investors and enterprises in order to draw high-end foreign industries and global services.6 FEZs are similarly known as free zone (FZ), free port (FP), customs free zone (CFZ), EPZ, foreign trade zone, free production zone (FPZ), FTZ, industrial free zone, tax free zone, customs free airport and foreign access zone.7 FEZs are also areas characterized as a part of a national economic area rather than a geographic territory where preferential economic conditions are being imposed with respect to entrepreneurs.8 Thus, others regard FEZs as a means of selective reduction of the state’s power to interrupt with economic processes. FEZs are referred to as devices that are capable of