IMPACT OF FREE ECONOMIC ZONES ON REGIONAL ECONOMIC DEVELOPMENT: THE CASE OF KLAIPEDA FREE ECONOMIC ZONE IN LITHUANIA

Abstract

The rapid growth of cooperation among countries, globalization, and integration has been some of the most significant indicators for the growing importance of free economic zones [FEZs] in the system of world economic relations. However, despite the advantages provided by FEZs, not all countries can successfully exploit the potential of FEZs. It is noticed that state institutions are hesitant to establish special purpose economic zones due to the difficulty of measuring the benefits of FEZs. This article aims to explain the phenomenon of the FEZ impact on regional economic development. In this article, based on the correlation analysis an algorithm is developed according to the interfaces illustrating the highest determination coefficient. The algorithm provides an opportunity to reveal the dependence on regional economic development from FEZs activity. The study reveals that the most critical FEZs activities that significantly impact regional economic development are the amount of attracted foreign direct investments [FDI], the number of companies operating in FEZ and jobs created in the zone.