Comparative Analysis of the Entrepreneurial Ecosystems in Free Trade Zones and Nonfree Trade Zones

Abstract

This chapter examines the dynamics of entrepreneurial ecosystems (EEs) in emerging economies, using Costa Rica as a case study. While countries like China, India, and Brazil have received growing attention in EE research, smaller emerging economies remain underexplored. Costa Rica presents a unique context due to its strategic use of free trade zones (FTZs), which account for 14% of GDP despite representing only 1% of businesses. In 2023, FTZs experienced 12.8% production growth, compared to 5.5% in nonfree trade zones (NFTZs), highlighting the need to investigate the distinct ecosystem characteristics of each regime. Using a sequential explanatory mixed-methods approach, the study surveyed 480 managers and conducted 30 in-depth interviews. Findings reveal that FTZs exhibit features commonly associated with advanced economies, such as strong networks, resource availability, and collaborative governance, while NFTZs reflect the constraints typical of emerging markets. This chapter applies the interaction–resource–governance framework to explain these differences and offers policy recommendations to strengthen NFTZ ecosystems by adapting successful practices from FTZs. This research contributes to the literature by providing a rare intra-country comparison of EEs in an emerging economy and offers practical insights for policymakers and ecosystem builders.