Areas with low taxes and incentives for foreign investment are commonly called what?

• A. Special Economic Zones (SEZs)
• B. Export Processing Zones (EPZs)
• C. Economic Liberalization (1991)
• D. Hong Kong (Entrepôt)

Answer: (A)

Favorable tax regimes and streamlined rules to attract foreign investment are implemented in designated areas called Special Economic Zones. These zones are set apart within a country and offer incentives like tax holidays, relaxed customs procedures, easier regulations, and improved infrastructure to encourage investment, manufacturing, and trade. The key idea is combining location with a package of policies that make doing business easier and cheaper for foreign investors.

Export Processing Zones are related but more narrowly focused on manufacturing and exporting goods, often with specific exemptions for export activities. Economic liberalization refers to broader policy changes to reduce state control in the economy, not a geographic area. Hong Kong as an entrepôt describes a port city that functions as a trading hub, not a country-designated zone with investment incentives.