Free Trade Zones

Free Trade Zones are typically located in third world or peripheral countries. They are a special zone where most laws of the country do not apply. These zones are used by multinationals to set up factories to produce goods (e.g. clothing or shoes).

The companies can produce goods here without having to worry about export restrictions or tax payments. Usually, these zones are set up by the government after lobbying from multinationals, who use the argument that this will attract jobs and thus stimulate the economy of a land.

However, once these zones are set up the country is at the mercy of the corporations because they can leave at any time, to hire workers in another country. This gives corporations much power which they can use to demand extras: often the country pays part of the initial cost of factory setup, and promises not to ask payment of taxes for the next few years. As soon as these years are over, the company threatens to leave... third world governments are at the mercy of these corporations.

see also

• Jamaican Free Zones
• Sweatshop
• Third world
• Multinational corporation