How Free Trade Zones Boost Businesses' Global Reach

Free Trade Zones (FTZs) are like special zones where businesses get extra perks to trade globally. A recent study looked at companies listed on the Shanghai and Shenzhen stock exchanges from 2009 to 2022. It found that FTZs really help businesses expand internationally.

The Study's Methodology

The study used a method called difference in differences. This compares businesses inside and outside FTZs over time. The results were clear: FTZs significantly boosted internationalization. Even after checking for other factors, the conclusion stayed strong.

How FTZs Help

• Digital Transformation: Pushes businesses to go digital.
• Resource Optimization: Helps use resources better.
• Green Technology Innovation: Encourages innovation in green technology.

These changes make companies more competitive globally. The study also found that FTZs help more in smaller cities and certain types of businesses. These include:

• Large firms
• Tech-driven companies
• Businesses with leaders who have international experience

Positive Effects Beyond Borders

Interestingly, FTZs also have a positive effect on nearby cities. This means the benefits spread beyond the FTZ borders.

Conclusion

This research shows that FTZs are a big deal for businesses wanting to go global. They offer a clear path to success in the international market.