A geographical region within a country that has economic laws different from the country’s typical economic laws is defined as:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Special Economic Zone.
A country may mark out a region where the usual rules are relaxed to draw in business. Inside it the economic laws on taxes, customs, labour and the setting up of firms are different from, and usually more liberal than, those in the rest of the country, so that foreign firms find it attractive to invest there. Such a region is a Special Economic Zone (SEZ).
China set up SEZs in the reforms it began in 1978, to attract foreign investors, and India too has set up SEZs.
Why the other options are incorrect
Option (1) State Owned Enterprises. — Incorrect. State owned enterprises are enterprises owned by the government, what India calls public sector enterprises, so they are firms, not regions with laws of their own.
Option (3) Constitutional Protection. — Incorrect. This is the protection that a constitution gives to the rights of people or groups. It is a legal safeguard, not a geographical region.
Option (4) Development Model. — Incorrect. A development model is the strategy a country follows to develop, such as a mixed economy or a market economy. It is a policy approach, not an area within a country.
Note: A same/similar question was asked in CUET (UG) in the papers below.
| 2026 | 2025 | 2024 | 2023 | 2022 |
| 13-05 S1* 21-05 S2 | – | – | – | – |
* A similar question.
NCERT (2025-26): “8.1 Introduction … The present day fast industrial growth in China can be traced back to the reforms introduced in 1978. China introduced reforms in phases. In the initial phase, reforms were initiated in agriculture, foreign trade and investment sectors. In agriculture, for instance, commune lands were divided into small plots, which were allocated (for use not ownership) to individual households. They were allowed to keep all income from the land after paying stipulated taxes.… …At this stage, enterprises owned by government (known as State Owned Enterprises—SOEs), which we, in India, call public sector enterprises, were made to face competition.… …Over the years, as production increased, the proportion of goods or inputs transacted in the market also increased. In order to attract foreign investors, special economic zones were set up.…” |