Trade effects of free zones in the context of regional development dynamics: The case of Agean Free Zone

In the 20th century, the world witnessed two major economic crises. The first one is Great Depression of 1929, the second one is the oil crisis in 1970's followed by the economic contraction it created. Deepening of crisis especially in economic field has transformed the global economy and trade; and, resulting from the blockage of import substitution approach, ensuring the outward oriented growth and the balance of international payments became the target of developing countries more particularly. After both of these crises, we see that establishing free zones to counteract the effects of global trade's recession gained momentum. In Turkey, outward oriented growth model was adopted along with the economic stability measures taken in 1980; within this scope, the topic of establishing free zones in compliance with export oriented investment and output growth, accelerated foreign capital and technology inflow, developed external financing and trade opportunities was added to the agenda. Along with the important advantages and incentive implementations provided with Free Zones Law introduced in 1985, free zone establishment efforts have been increased. In this study, the effects of free zones' in the world and Turkey on national economies and foreign trade have been indicated while stating their existence, types and general features within conceptual framework. An answer for the question of whether there is a clustering potential by examining the production and distribution in Aegean Free Zone has been sought. The activity and trade volume of the free zones in Turkey, specifically in Aegean Free Zone's activities and the foreign trade effects it has produced since its establishment have been subjected to comparative analysis with the help of related data; additionally, the international competitiveness of the Aegean Free Zone in trade is measured from the region to abroad and from abroad to the region within the framework of the "Revealed Comparative Advantage (Balassa) Index" while its findings are evaluated.