What are zones established by many countries in the periphery that offer favorable tax, regulatory, and trade arrangements to attract foreign trade and investment?

What are zones established by many countries in the periphery that offer favorable tax, regulatory, and trade arrangements to attract foreign trade and investment?

• A. Export Processing Zones (EPZs)
• B. Maquiladoras
• C. World Systems Theory
• D. Dollarization

Answer: (A)

Export processing zones are areas created to attract foreign trade and investment by offering favorable tax treatment, relaxed regulatory requirements, and streamlined trade procedures. They’re typically located in peripheral countries to boost exports and industry by lowering the costs and hurdles for foreign manufacturers. Firms operating there often enjoy tax holidays, duty exemptions on imported inputs, and simpler customs, which makes locating production abroad more attractive for exporting goods. Maquiladoras are a well-known example of this approach in Mexico, but the broader idea covers similar zones in many countries. In contrast, World Systems Theory is a theoretical framework about core-periphery relationships, not a policy mechanism, and dollarization refers to adopting another country’s currency rather than establishing a trade and investment zone.

Export processing zones are areas created to attract foreign trade and investment by offering favorable tax treatment, relaxed regulatory requirements, and streamlined trade procedures. They’re typically located in peripheral countries to boost exports and industry by lowering the costs and hurdles for foreign manufacturers. Firms operating there often enjoy tax holidays, duty exemptions on imported inputs, and simpler customs, which makes locating production abroad more attractive for exporting goods. Maquiladoras are a well-known example of this approach in Mexico, but the broader idea covers similar zones in many countries. In contrast, World Systems Theory is a theoretical framework about core-periphery relationships, not a policy mechanism, and dollarization refers to adopting another country’s currency rather than establishing a trade and investment zone.