| Author: |
Malhotra, Shavin |
| Author affiliations: |
Carleton University (Canada) |
| Publication date: |
2008 |
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Abstract:
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Free Trade Zones FTZs) are geographically-defined areas within countries that are intended to provide a barrier-free environment for business, often accompanied by special incentives, for firms considering in-zone operations. FTZs are an important institution given their success in improving the economic development and international competitiveness of host countries and also by virtue of their role in the internationalization strategy of business firms. There are more than 2,500 FTZs across 130 countries; the number of FTZs has doubled in the last five years. While there is sufficient research on FTZs in the area of developmental and regional economics, business research is sparse and limited in its scope. This thesis provides a comprehensive view of FTZs including its operations, structure, role, function, and orientation, suggests a new taxonomy for FTZs, and also examines the FTZ-tenant arrangement by studying the motives, perceptions, and satisfaction of tenant firms. The objectives of this study were achieved by following an extensive three-phase methodology, which included a content analysis of 105 FTZ websites as part of Phase I. Phase II included in-depth case studies of four different FTZs, which involved 35 interviews with zone officials and company managers. Finally Phase III involved a broad-based survey of 115 tenant firms spread across two different FTZs. Detailed analysis of the three phases suggests that FTZs can be categorized as three main types, based on their function and orientation --- Export, Import, and Trade. The results also show that FTZs offer more than just "duty-free" benefits, importantly, they also offer strategic advantages which include among others, proximity to important markets and international trade routes, potential role in a global and/or a regional distribution system, and supplying of important business facilities such as storage, manufacturing, warehouse, and infrastructure. Additionally, it was found that 1) better location factors such as banking and transport facilities, and proximity to industry clusters, 2) internalization benefits, and 3) lower market risk in the zone, significantly impact tenant firms satisfaction with the zone investment climate. The results from this study should benefit the academic and business community alike |
| Database: |
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