When a country wants to attract capital quickly, it often creates special economic zones (SEZs) — territories with low taxes, customs exemptions, and simplified regulation. The idea is appealing: give an investor better conditions on a defined patch of land, and they come with jobs and exports. But global experience is harsh: for every successful Shenzhen there are dozens of “dead” zones. The secret is that a tax break works only together with infrastructure (land, power, roads) and stable governance — and it’s precisely here that most zones fail.
Ukraine’s own bitter experience matters here. In the 1990s the country created around two dozen free economic zones — and in 2005 the incentives were abolished, because the zones had turned into channels for smuggling and tax evasion. That is why a straight revival of the old SEZs is politically toxic and incompatible with EU rules. A better reference is the Polish model: in 2018 Poland made the incentive nationwide, tying it to the size of the investment and to EU limits. In their time, its zones attracted around 132 billion zloty and over 388,000 jobs.
What to implement in Ukraine. Not to create a classic SEZ, but to scale what already works and is EU-compatible: industrial parks (10 years with no profit tax), Diia City for IT and defense technology (already over 3,700 companies), and the “significant investments” regime with compensation of up to 30% of the outlay. The focus should be on the western border regions closest to the EU market, and on priority sectors: IT, defense technology, agri-processing, green energy. And most importantly — first fill the existing parks (only about a third are currently operating), and only then build new ones. Because a zone’s fate is decided not by the size of the incentive, but by the quality of governance and real infrastructure.
