Considering that Free Trade Zones are, by their very definition, places beyond typical borders and standard laws, it makes sense the genesis of the concept is a quirk in geography, technology, and time. It seems sensible to assume they originated in China; after all, the Special Economic Zones in China, and the country's Open Door Policy, helped build the nation's economy in the 1980s and became key catalysts in the creation of an economic juggernaut.
But that would be off, way off, in fact. The world's first Free Trade Zone sprung up not in a cosmopolitan crossroads or a busy border, but in a small, rural village on the west coast of Ireland.
According to an article in ArchDaily, Shannon, despite it's pastoral setting, actually had a few things going for it when it became the world's first Free Trade Zone in 1959. After WWII, trans-Atlantic flights couldn't make the trip from the U.S. to mainland Europe in one go, so the Irish government built Shannon Airport, the westernmost in Europe, as a stopover point for long-haul flights. Not surprisingly, the hub for travelers also became the home of the world's first duty-free zone, Travel Retail, which mostly sold cigarettes, whisky, and gin (duty free allowances made it possible to purchase up to 2,000 discount cigarettes in those days). Ms. Kitty Downes sold souvenirs such as Irish linen from a stand in the airport, but quickly expanded her offerings, adding fragrances from Dior Chanel that enticed American travelers. Waterford crystal owes a big part of its legacy to the exposure it generated at this small but significant counter, a clever concept that, however small, helped build Shannon's economy and reputation.
Fast-forward a few decades, when advancing airplane technology meant intercontinental flights would soon have no reason to stop in the County Clare, and the Irish suddenly needed to figure out a way to protect their investment in Shannon. Brendan O'Regan, the Irish businessman and former hotelier in charge of the airport (and originator of the duty-free zone), had an idea.
The Shannon Free Zone, which opened in 1959, and Shannon New Town, which started a few years later, became the innovations that preserved the area's status as a stopover point while building it into a magnet for international trade. Ireland, which became a republic in 1949, needed to quickly develop and build its own businesses and economy, and this special economic zone, which offered targeted tax breaks to foreign companies, as well as an adjacent town constructed later to house workers, attracted scores of multinationals. By the time Shannon was officially named a town in 1980, 10,000 workers called the complex home, and were employed by top companies such as GE, Intel, and Lufthansa. O'Regan, who was inspired to create the zone in part by the Marshall Plan the United States used to help start-up European economies after WWII, had helped create a spark that lifted the Irish economy.
Shannon may have been more of a quirk if not for a visit by Chinese politicians. In 1980, Jiang Zemin, a former Chinese President who was then the Senior Vice Minister of State Imports and Exports Administration, visited Shannon to study its policies, and how it became an internationally recognized innovation center. He liked the model enough to take it home, and it was adapted to Shenzhen, then a small group of villages, which has blossomed into a metropolis and manufacturing center with 10 million people. Many top Chinese leaders have visited Shannon in the decades since, and praise the area for it's unique historic ties to China, and how it serves as a model from turning a pastoral economy into a high-tech powerhouse. While the Irish town is still relatively small and has maintained it's character, it's also left a footprint on the world economy that's become quite large.
· Shan-Zhen: How a Small Irish Town Influenced the Mega-City Shenzhen [ArchDaily]