Reforming of free economic zones in Belarus: which policy to choose?

Nowadays in Belarus there are 6 free economic zones (FEZ), the first zone “Brest” appeared 20 years ago. According to the law “About free economic zones” zones were created for “assistance to socio-economic development of the Republic of Belarus and separate administrative-territorial units, attraction of investments in creation and development of export-oriented and import-substituting productions which are based on new high technologies and for another reasons”.

The analysis of the FEZ’s work gives a contradictory picture of their activity. The FEZ’s contribution in an inflow of foreign direct investments in the country and total employment is at a low level (5% and 3% accordingly). The dynamic of a number of indicators is also worrying. A number of residents registered in the FEZ and a number of employees were increasing the last few years. Furthermore, specific weight of unprofitable enterprises in free economic zones is higher than on the average in Belarus. For export the FEZ’s percentage in total country’s export is low according to international standards, and actually the FEZ didn’t contribute to the export geographical diversification and its reorientation from traditional CIS markets to new directions.