Ree Economic Zones in Transition Economies and Its Impact of Economic Development of a Country

Free Economic Zones in Transition Economies and Its Impact of Economic Development of a Country

The hypothesis of the Master s Thesis  free economic zones is an efficient and effective trade instrument that contributes to an important level of economic development of the country (with a focus on transition economies).
[A particular attention should be paid to factors that lead to a success of free economic zone in a small country with transition economy. A while ago a FEZ was established in my country (Georgia) that already has rather liberal economic legislation and minimum regulations and I would like to analyze whether it will bring any significant impact at this stage based on other countries experience. Preferably, cases of Baltic Republics, Bulgaria or similar should be analyzed. These countries are similar to my country in territory size, the FEZ in ports and other factors. Two cases will be enough, one -success and another -failure demonstrated by their economic performance.
The last chapter on Georgia I will write myself]
Supporting Theory might be:
Neo-classical theory (Hamada, 1974, Hamilton, Svensson, 1982, Wong, 1986, Miyagiwa, 1986, Devereux, Chien, 1995, Spinanger, 1984):
FEZ is considered to be the second best solution (the first best solution is a completely free trade) to the country for the integration into international division of labor without the subjection of the entire economy to trade liberalization.
The representatives of the neo-classical theory have specified that FEZ generate several benefits for a certain country by:
 Attracting foreign direct investments (FDI);
 Promoting employment;
 Increasing export;
 Stimulating the establishment of domestic economic connections through the use of technologies and local materials.

Theory on unbalanced development of regions (Litwack, Quian, 1998):
In case a country has no sufficient resources to develop all the regions evenly, then the accelerated development of individual regions (here FEZ in transition economies of Europe are meant) might be the best solutions.
Research question: When the FEZ is appropriate to be utilized to maximize its impact?
Main argument:
The creation of FEZs facilitates the deeper inclusion of the national market into the world economic system, attracting foreign and domestic investments for the development of highly payable production, increase of the currency receipts to the budget of the country, increases of the number of working places and provision of employment of population and finally, ensures complex development of economically undeveloped regions providing [ key success factors  by all means, taking into consideration situation in a country in terms of reforms, liberal legislation, etc.]
Some of counter arguments:
Creation of favorable  positive discrimination conditions for some enterprises in fact results in higher taxation and similar pressures for others, which, in its turn, creates additional disincentives for  non-zone businesses and
In a small country with rather liberal legislation better to continue liberalization of the entire country would be preferable.
Methodology: case study, methods of analysis and descriptive statistics.
Suggested Thesis Initial Outline :
Chapter 1 will provide definitions of FEZ, the types for the classification of FEZ and the classification of FEZ according to the aims for their establishment. The chapter will give the insight into the economic theories dealing with positive and negative aspects of the existence of free economic zones.
The main direct (attraction of foreign direct investments, creation of new jobs, and export development) and indirect (formation of feedback with the local economy, and increase of indirect employment) benefits from the activities of FEZ will be viewed and arguments for and against the establishment of FEZ are classified.
Chapter 2 will overview historic evolution of FEZ, which has started more than thousand years ago and still continues its development, since the number of FEZ is increasing in the world.( including key success factors and lessons learned)
The situation of FEZ in the European Union and FEZ of the new member states should be surveyed been surveyed. Transition economies.
Chapter 3 will introduce the history of evolution of FEZs in Latvia, Lithuania and Bulgaria (tentative) (1 zone in each target country) and the characteristics of the present situation.
Chapter 4 will provide analysis of the most important economic indicators of FEZ, the comparative analysis was done by means of analogical indicators for Latvia, Lithuania and Bulgaria in general and respective cities ( FEZ venue). Success and failurewhy?
Will write myself Chapter 5 will be concentrated on establishment of FIZ in Poti Port; the laws and regulations determining the activities of FIZ will be overviewed.
The chapter will end with the analysis of the inquiry results of population (totally 150 respondents  businesses) to evaluate the level of information of population regarding the activities of FIZ in Georgia.