The North Frontier Free Zone (NFFZ) is a border policy of the Mexican Federal Government that reduces value-added tax (VAT) and income tax rates to boost economic growth in 43 municipalities and six states bordering the United States. The benefits in these Special Economic Zones (SEZs) also include reductions in the Special Tax on Production and Services (IEPS) for gasoline and an increase in the regional minimum wage. Alongside the economic development generated by SEZs, the literature indicates that these zones attract specific crimes related to illicit trade, asset protection, and environmental damage (Hall et al. 2023).
In European countries, SEZs foster a weakened tax regime, allowing elites and large corporations to establish free trade zones to store luxury goods without paying taxes. In other countries, criminal activity exploits the tax advantages of SEZs by manipulating customs declarations to illicitly profit. The disappearing merchant fraud includes the trade of genuine but illegal products, such as Jin Ling tobacco, which is legally manufactured in Russia but illegally marketed in the European Union (Shleynov et al., 2017). Thus, a criminal practice that receives little attention is the "leakage" of goods from these zones into the domestic market, without customs declaration or tax payment, in addition to evading other applicable regulations (Shadikhodjaev, 2011).
Government fraud in SEZs is heterogeneous. Therefore, authorities face serious difficulties in detecting criminal activity in these areas. In fact, it is poorly understood how fraudulent companies seek to remain undetected within the SEZs themselves to continue operating and accumulating profits, and whether some areas are more susceptible to this type of crime at the neighborhood level than others. Although the literature mentions “…systemic weaknesses that make areas vulnerable to such abuse, including… weak procedures for inspecting goods and registering legal entities” (Holden, 2017), to the best of our knowledge, it has not been empirically proven whether companies seek a geographic location to avoid detection.
Since January 1, 2019, Tijuana has been part of the North Frontier Free Zone (NFFZ), along with the other municipalities in the State of Baja California. The region has experienced a 4-7 percent increase in economic performance since its creation (Ventosa et al., 2026). We used Local Indicators of Spatial Association (LISA) and the Spatial Point Pattern Test (SPPT) on 2,167 maquiladora plants across 916 neighborhoods in Tijuana to study the geographic patterns of companies engaged in goods leakage. We analyzed 797 companies administratively shut down for customs fraud and compared them with 1,370 active companies to understand whether they seek to remain undetected in industrial parks, forming hotspots and taking advantage of the legal economy, or whether fraudulent companies concentrate in neighborhoods where they can go unnoticed.
The results reveal that both groups are spatially concentrated, but in different areas. Within the maquiladora sector, active companies cluster more strongly (Moran's I = 0.204) than shut-down companies (Moran's I = 0.143), and, above all, in different neighborhoods. The analysis by business subsector reveals that the clustering is not homogeneous. In some business sectors, active companies are grouped geographically, while shut-down companies appear dispersed. The SPPT supports these findings with a robust global similarity index of 0.43 (p < 0.01). Fifty-seven percent of neighborhoods exhibit a distinct business composition between the two groups. Fraudulent businesses do not appear to hide within industrial parks; rather, they tend to occupy their own locations, with lower institutional visibility and in socioeconomic contexts with limited access to public services and proximity to crime hot spots. The SPPT results include the mapping of the 916 neighborhoods in Tijuana with significant differences, as detailed in the article.
The research contributes to understanding the criminal logic behind the selection of crime locations within Special Economic Zones, unraveling their spatial paradox (Hall et al., 2023). Thus, public policies could incorporate these findings to improve governments' processes for inspecting goods and registering legal entities, thereby enhancing territorial governance in SEZs.

References:
Hall, A., Antonopoulos, G. A., Atkinson, R., & Wyatt, T. (2023). Duty-free: Turning the criminological spotlight on special economic zones. The British Journal of Criminology, 63(2), 265-282. https://doi.org/10.1093/bjc/azac010
Holden, C. (2017). Graduated sovereignty and global governance gaps: Special economic zones and the illicit trade in tobacco products. Political Geography, 59, 72-81. https://doi-org.orion.cide.edu/10.1016/j.polgeo.2017.03.002
Shleynov, R., Candea, S., Campbell, D., & Lavrov, V. (2008). Made to be smuggled: Russian contraband cigarettes “flooding” EU. Tobacco Underground.
Shadikhodjaev, S. (2011). International regulation of free zones: An analysis of multilateral customs and trade rules. World Trade Review, 10(2), 189–216. https://doi.org/10.1017/S1474745611000085
Ventosa Santaulária, D., Cepeda‐Suárez, R., & Romero‐González, A. (2026). The Impact of Special Economic Zones on Border Regions in Mexico. Bulletin of Economic Research. https://doi.org/10.1111/boer.70012