Human Resource Management in Free Trade Zones: A Narrative Literature Review

Abstract

Free trade zones (FTZs), including export processing zones, special economic zones, free ports, and related customs regimes, are widely used to attract foreign direct investment, promote exports, and generate employment. Their macroeconomic performance, however, depends partly on how firms and zone institutions recruit, protect, develop, and retain workers. This article presents a narrative review of human resource management (HRM) in FTZs. It integrates peer-reviewed studies with reports and legal instruments issued by international organisations and public authorities, with the literature updated through August 2026. The synthesis identifies five recurring themes: recruitment and labour flexibility; industrial relations and the liaison role of HR managers; wages, working conditions, and employee well-being; competency development, talent management, and human capital; and sustainable HRM in international trade governance. The evidence indicates a gradual, uneven transition from first-generation zones organised around labour-intensive production and short-term cost control to newer zones that combine trade facilitation with services, innovation, institutional experimentation, and human-capital development. This transition does not occur automatically. Technology spillovers and skill upgrading depend on local absorptive capacity, credible labour institutions, firm-level HR practices, and coordination among government, education providers, employers, and worker representatives. The Indonesian experience in Batam, Bintan, and Karimun illustrates these interdependencies: physical incentives and regulatory privileges alone have not guaranteed productivity upgrading or strong workforce capabilities. The review contributes an HRM-centred interpretation of zone development and proposes a research agenda that connects firm-level practices with zone governance, labour rights, and global supply-chain accountability.