What are free trade zones designed to do?

Free trade zones (FTZs) are specifically designed to encourage investment and stimulate foreign direct investment (FDI) in a particular area by providing favorable conditions for businesses. These zones typically offer benefits such as reduced tariffs, exemptions from certain regulations, and the ability for companies to operate with fewer restrictions. This environment makes it more attractive for both domestic and international businesses to set up operations, thus promoting economic growth and job creation in the region.

In these zones, businesses can import, manufacture, and export goods with fewer barriers, ultimately creating a competitive edge in global markets. The primary goal of free trade zones is to enhance trade and economic activity rather than increase bureaucracy or restrict international trade, which is why the choice focusing on encouraging investment and foreign direct investment is correct.