How Special Economic Zones Are Transforming Global Trade and Investment

How Special Economic Zones Are Transforming Global Trade and Investment

· 4 minute read

Global trade within Special Economic Zones has grown rapidly in recent years, with many countries recognizing the vast benefits on offer for their economies. 

With many attractive benefits such as tax breaks, duty-free imports and exports, streamlined customs procedures, and infrastructure support, foreign investors taking advantage of SEZs policies can fast-track their business goals while side-stepping the bureaucracy that would usually accompany such ventures.

The business-friendly policies and economic regulations that Special Economic Zones boost the demand for new ways to increase global mobile investment.   

With many benefits, let's explore some of the core ways SEZs are transforming global trade and investment. 

Creating employment opportunities

Special Economic Zones can create local employment opportunities, both direct and indirect. 

Direct Jobs

Direct jobs are created by companies and include those who are on the ground taking care of the day-to-day business operations, such as managers, production line workers, or supervisors.

Indirect Jobs

Indirect jobs created as a result of the economic activity of another business or industry and lend support to the core operations of the direct jobs. Although not directly linked to the business's core operation, indirect jobs can include supporting industries such as logistics, security, or maintenance. 

Forming an essential part of the economy, indirect jobs can provide much-needed opportunities for workers in a variety of industries and occupations. 

Technology Transfer

SEZs encourage technology transfer to benefit local companies. By sharing the existing best practices of foreign companies, local firms can gain access to information they may not have been able to find otherwise and increase their presence and ability to compete within the marketplace. 

Examples of technology transfer for this purpose may include:

  • The innovation of structures and ecosystems to support and promote economic development

  • Sharing of marketing technologies to expand local firm's reach

  • Negotiation of license agreements and partnerships

  • Securing patents or IP rights for products

Infrastructure Development

With superior infrastructure in place, Special Economic Zones are transforming the logistical and technological aspects within them.

Superior Infrastructure

Upgraded infrastructure facilities within SEZs, such as easily accessible roads, reliable water and power, and high-speed internet, are attractive to companies while also benefiting surrounding regions.  

Accessibility in the Air and on Land

Furthermore, Special Economic Zones located around airports, land borders, and major ports are of real benefit to companies who rely on exporting, speeding up the transport and transit of goods, and allowing greater access for core staff and auxiliary workers to come and go. 

Economic Diversification

Another way that SEZs are transformative is the diversifying economy it creates by attracting investments in new sectors and promoting non-traditional exports. Creating a more balanced and varied economic environment, more jobs are created as a result of new industries, exports increase, and the local economy grows. 

Mitigating Risk

By creating an economically diverse area, Special Economic Zones ensure that the economy is not dependent on any one industry or sector, mitigating the chance of major financial upheaval should any industry upset ensue. 

Training the Workforce

The provision of training and education programs is key to developing a strong workforce who have the diverse skills required to meet the needs of a varied economic region. 

Prosperity and Sustainability

Building a more prosperous economic region is an important factor in sustaining existing jobs, as well as attracting new businesses to the region where they can grow and be a part of a sustainable economy. 

Increased Foreign Direct Investment (FDI)

For foreign investors, SEZs offer a range of incentives, including tax breaks, streamlined regulations, access to infrastructure, and other forms of financial support. 

Designed to make it easier and more attractive to invest in a country, these incentives create a business-friendly environment, helping Special Economic Zones to attract investment from a range of different sources, creating new economic growth and development. 

FDI within SEZs can take various forms, including:

  • Joint ventures

  • Mergers and acquisitions

  • Greenfield investments. 

Greenfield Investments

Greenfield investments in Special Economic Zones refer to the establishment of new businesses or construction of new facilities by foreign investors within designated geographical areas. Called greenfield, they involve starting a new business from scratch and building the infrastructure and facilities required for its operations.

Greenfield investments in SEZs can offer a range of benefits to foreign investors and the host country, such as: 

  • Access to new markets

  • Lower production costs

  • Job creation

  • Technology transfer

  • Industry development

Global Opportunities, Exciting Benefits

As we have explored, Special Economic Zones are leading the way when it comes to the development of global economic opportunities and foreign investment for new and existing businesses. 

With so many exciting benefits, now is the time to take advantage of all that AZUR SEZ has to offer. 

Within the top 1% of Special Economic Zones, AZUR offers the ultimate work environment to start and scale your business. Get in touch today

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