Practice in developed and developing countries indicates the existence of numerous and heterogeneous free zones as well as the different role which they have in the economic development of countries that have implemented them. The main objective for start-up of a modern free zone with industrial characteristics is to attract those investors who will build the industrial infrastructure for the production of goods aimed for exports. Consequently, free zone will contribute, inter alia, to the increase in national exports and decrease in deficit of the country’s current account, to the creation of new jobs and new added value, to the increase in the dynamics of economic activities and generation of new entrepreneurial opportunities, to the transfer of new technologies, knowledge, skills, good organizational and managerial business practice, as well as to the reduction of regional imbalance. Experiences of former transition countries indicate that a free zone represents an important policy instrument for the attraction of foreign direct investment, especially the greenfield ones. Furthermore, experiences of developed countries indicate that free zone can act as a policy instrument for promoting regional development and development of a country as a whole. The main purpose of this paper is to consider the benefits that free zones can have on economic and social development of the area where they are located. The Osijek free zone is in the centre of this consideration.
