THE IMPORTANCE OF FREE ECONOMIC ZONES IN THE DEVELOPMENT OF THE ECONOMY

Free Economic Zones (FEZs) have emerged as a pivotal instrument for accelerating economic development, particularly in transitional and developing economies. This article examines the role and significance of FEZs in fostering sustainable economic growth, enhancing regional competitiveness, and attracting foreign direct investment (FDI). Drawing on contemporary economic theory and empirical evidence, the study analyzes how FEZs contribute to industrial diversification, technological transfer, employment generation, and export expansion. Special attention is given to the mechanisms through which preferential tax regimes, regulatory flexibility, and infrastructure development within FEZs stimulate business activity and innovation. The research adopts a mixed-method approach, combining quantitative analysis of macroeconomic indicators with qualitative assessment of policy frameworks. The findings indicate that well-designed and efficiently managed FEZs significantly increase gross regional product (GRP), improve productivity, and strengthen integration into global value chains. However, the study also identifies key challenges, including uneven regional development, potential fiscal costs, and the risk of limited spillover effects to the broader economy. The article concludes that while FEZs are not a universal solution, they represent a highly effective policy tool when aligned with national development strategies and supported by strong institutional governance. Policy recommendations are provided to enhance the effectiveness of FEZs, including improving infrastructure connectivity, strengthening human capital, and ensuring transparency in regulatory practices. Overall, the study underscores the critical importance of FEZs in shaping modern economic development trajectories.