Free zones represent a physically enclosed space, part of the territory of a country, equipped with adequate infrastructure, for the purpose of performing both production and service activities with certain benefits and facilities. Apart from the promotion of exports and foreign exchange inflows, the free zones are often seen as an instrument for stimulation of economic growth through additional investments, technology transfer and job creation. They are a part of the customs territory of a sovereign state, where the envisaged activities and movement of persons and objects are performed under special conditions and with special supervision. An analysis of all relevant factors in the Republic of Srpska indicates a gap between reality and an active approach to the development of free zones and their impact on economic growth. The objective of establishing free zones is to overcome the obstacles to investment in the economy, including restrictive policies, poor governance, inadequate infrastructure, etc.