Posted by: mulrickillion | October 8, 2011

Special Economic Zones: What Have We Learned?

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By Thomas Farole, Geopolitical Monitor, Sept 28, 2011 —

VoxEU.org, Sept 28, 2011

Summary

As competition for FDI and trade share intensifies in a tightening global environment, more and more countries are looking at the potential of special economic zones to kickstart growth. But China aside, do these zones work? What have we learned from the experiences of developing countries over recent decades?

Analysis

It is more than 50 years since the establishment of the first modern special economic zones. But it is only relatively recently, particularly since the 1990s, that their popularity as a policy instrument has taken off. The International Labour Organization‘s database of special economic zones reported 176 zones in 47 countries in 1986; by 2006 this had risen to 3,500 zones in 130 countries (Boyenge 2007). Traditional export-processing zones (EPZs) were designed to attract investment by enabling countries to better exploit a key source of comparative advantage – low-cost labor – which was otherwise underutilized because of low levels of domestic investment and barriers (regulatory, infrastructure, etc.) preventing foreign direct investment (FDI). These EPZs have operated under simple principles. . . .

Special Economic Zones: What Have We Learned? – Geopolitical Monitor

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