Free zones are a widespread but little understood phenomenon in international trade today. Ranging from free trade zones in Panama and the United States to export processing zones in Taiwan and Ireland, their number has mushroomed to more than 500 worldwide and is likely to increase further. This article outlines the basic characteristics of various types of free zones and then examines them from two perspectives: the traditional view, in which zones are seen mainly as convenient production locations or duty-free areas for short-term warehousing; and a contemporary strategic view, in which zones are seen as an integral part of international business strategy.