Number of countries with special economic zones Worldwide 1975-2018

The number of countries with special economic zones worldwide increased reaching 147 in 2018, from about 29 in 1975. Free trade zones facilitate the accessibility of investors to the market and offer an encouraging incentive for foreign direct investments.

 Overview of Special Economic Zones

Free trade zones are geographical areas in a host country that serve the purpose of providing an encouraging atmosphere for foreign investors to enter the market. The special economic zones (SEZ) have special regulations such as reduced taxes and duties, better infrastructure, and favorable labor laws. The monetary and non-monetary incentives reduce the risk involved in entering a new market and encourage foreign direct investments. Free trade zones gained popularity over the years, reaching about 5.4 thousand zones globally. The United Arab Emirates (UAE) was the leading nation in the number of free trade zones in the Middle East and North Africa (MENA) region at 47 zones in 2018. Special economic zones increase cost efficiency for foreign investors and serve as an opportunity for the host country to improve its political relations with other countries.

 MENA Special Economic Zones

  With the increased focus on foreign direct investments and its contribution to the development of countries in the MENA region, free trade zones started becoming a part of most of the economies’ regimes. FDIs in the region almost reached 29 billion U.S dollars in 2017 after the economies recovered from the crisis that followed the Arab Spring years earlier. Special economic zones support the host countries combat unemployment by creating job opportunities. Both the male and female unemployment rates in the MENA region in 2019 were above the global average, with the female unemployment being three times the global average. The UAE is the leading economy in the free trade zone market, attracting more than 13.8 billion U.S. dollars of foreign direct investments in 2019. The fDI Magazine ranked the Dubai Multi Commodities Center (DMCC) as the top free trade zone globally for six continuous years.