In recent years the number of Free Trade Zones (FTZs) or Export Processing Zones (EPZs) has rapidly grown. Close to fifty countries have now established EPZs to stimulate and diversify their industrial growth. The efectiveness and performance of EPZs is an important topic of interest and concern for political decision-makers and donor agencies. The thesis lays out a theoretical and empirical framework for evaluating such zones, incorporating investigation of the Qesh Free Area(QFA), in the Persian Gulf, whose activities, employment and trading relations were studied to make a full evaluation of its performance. Through interviews with Iranian political and economic leaders and careful interpretation and analysis of pertinent documents, significant achievements and trends in Iran are reviewed. It is concluded that political, economic and social conditions are of greater relevance in attracting investors than the content of specific package of incentives offered to foreign industries and investors.