What is a common feature of special economic zones (SEZs) and free trade zones (FTZs)?

• A. They offer incentives to attract investment.
• B. They require all goods to be sold domestically.
• C. They impose high tariffs on all goods.
• D. They must be located in capital cities.

Answer: (A)

Special economic zones and free trade zones are built to spur investment and trade by offering favorable conditions to businesses. The common feature is that they provide incentives to attract investment—things like tax breaks, reduced duties, relaxed regulations, and streamlined procedures. These perks lower the cost and risk of setting up operations in the zone and encourage companies to invest, manufacture, or trade there, often focusing on export-oriented activities. Other statements don’t fit as well: zones aren’t about forcing all goods to be sold domestically, and they typically reduce or defer tariffs rather than imposing high ones. They also aren’t limited to capital cities; many are located near ports, borders, or other logistics hubs to maximize trade efficiency.