Free Trade Zones as Development Engines: Anzali’s Local Manufacturing Gains, Systemic Challenges, and Regional Development Lessons (Iran)

Free Trade-Industrial Zones, with their unique characteristics compared to domestic regions, can serve as effective platforms for economic growth and prosperity at both regional and national levels. However, without sufficient attention to the core objectives of these zones, they may transform into hubs for importing consumer goods rather than fostering exports and production. This change could result in capital fleeing the country and weaken the national economy.This study assesses the Anzali Free Trade-Industrial Zone's performance regarding investment, exports, and imports in the last two decades. Employing a mixed-methods approach, it analyzes data from library research and structured interviews with Anzali Free Zone administrators to evaluate implemented investments and national export-import statistics, including exports of goods produced within the zone for foreign and domestic markets.The results demonstrate a notable decline in import volumes through the Anzali Free Zone during the study period, while export levels have remained mostly unchanged. Nevertheless, the zone has experienced substantial growth in exports of locally manufactured goods, including final products for international markets and domestic shipments to mainland Iran - a positive indicator of expanding employment opportunities within the zone. Despite these achievements, several significant challenges persist. Regulatory inconsistencies continue to hinder operations, particularly in enforcing zone-specific policies. Furthermore, the zone has underperformed in developing value-added processing for regional raw materials. It faces critical infrastructure deficits that limit its potential as a key node in the North-South Transport Corridor. Addressing these limitations will require a multifaceted approach centered on attracting targeted investment in processing industries, fostering specialized industrial ecosystems, and pursuing strategic maritime partnerships to enhance trade connectivity. Such interventions could substantially strengthen the zone's capacity to drive export-led growth while maximizing its economic contribution to the broader region.