ABSTRACT
Free Zones have been perhaps seen as exploiting labour forces, with some enterprises using the free zone concept to deliberately employing cheap labour. It is true that free zones are designed to use local labour, especially where wage levels may be comparatively lower than elsewhere in the national economy. Direct transaction of technology and indirect spill-overs through various channels such as copying, reverse engineering, and the movement of workers and managers between foreign and domestic companies also facilitate transmission of knowledge to the rest of economy, thus benefitting everybody. An increasing number of countries are striving to create a favourable and enabling climate to attract FDI, and there are reasonable arguments both for, and against investment incentives with regards to efficacy and return on investment for host governments (national or local). Besides which, incentives may be good in the short term, but in the long term they cost, as incentives granted by government must be paid for in another way.
