Special economic zone

Special economic zone
A special economic zone (SEZ) is an area in which the business and trade laws are different from the rest of the country. SEZs are located within a country's national borders, and their aims include increasing trade balance, employment, increased investment, job creation and effective administration. To encourage businesses to set up in the zone, financial policies are introduced. These policies typically encompass investing, taxation, trading, quotas, customs and labour regulations. Additionally, companies may be offered tax holidays, where upon establishing themselves in a zone, they are granted a period of lower taxation.
The creation of special economic zones by the host country may be motivated by the desire to attract foreign direct investment (FDI). The benefits a company gains by being in a special economic zone may mean that it can produce and trade goods at a lower price, aimed at being globally competitive. In some countries, the zones have been criticized for being little more than labor camps, with workers denied fundamental labor rights.
Definition
The definition of an SEZ is determined individually by each country. According to the World Bank in 2008, the modern-day special economic zone typically includes a "geographically limited area, usually physically secured (fenced-in); single management or administration; eligibility for benefits based upon physical location within the zone; separate customs area (duty-free benefits) and streamlined procedures."
History
Modern SEZs appeared from the late-1950s in industrial countries. The first was in Shannon Airport in County Clare, Ireland. Some tax-free jurisdictions such as the Cayman Islands offer technology companies a way to keep their IP offshore in a Special Economic Zone (see Cayman Enterprise City).
From the 1970s onward, zones providing labour-intensive manufacturing have been established, starting in Latin America and East Asia. The first in China following the opening of China in 1979 by Deng Xiaoping was the Shenzhen Special Economic Zone, which encouraged foreign investment and simultaneously accelerated industrialization in this region. These zones attracted investment from multinational corporations and allowed export-oriented Chinese businesses to respond quickly to demand in foreign markets. China continues to maintain Special Economic Zones and certain open coastal areas. Most of China's SEZs are located in former treaty ports and therefore have symbolic significance in demonstrating a "reversal of fortunes" in China's dealings with foreigners since the century of humiliation. Researcher Zongyuan Zoe Liu writes that "[t]he success of these cities as 'red' treaty ports represented another step in China's overall reform and opening-up plan while legitimizing the leadership of the CPC over the Chinese state and people."
Numerous African countries have set up SEZs in connection with China, including over the period 1990 to 2018 establishing SEZs in Nigeria (two), Zambia, Djibouti, Kenya, Mauritius, Mauritania, Egypt, and Algeria. Generally, the Chinese government takes a hands-off approach, leaving it to Chinese enterprises to work to establish such zones (although it does provide support in the form of grants, loans, and subsidies, including support via the China Africa Development Fund). The Forum on China-Africa Cooperation promotes these SEZs heavily.
Types
The term special economic zone can include:
Free-trade zones (FTZ)
Export processing zones (EPZ)
Free economic zones (FZ/ FEZ)
Industrial parks / estates (IE)
Free ports
Bonded logistics parks (BLP)
Urban enterprise zones
See also
List of special economic zones by country
Exclusive economic zone
Urban enterprise zone
Four Asian Tigers
Free economic zone
References
Further reading
Chee Kian Leong, (2007) A Tale of Two Countries: Openness and Growth in China and India, Dynamics, Economic Growth, and International Trade, DEGIT Conference Paper pdf
Chee Kian Leong, (forthcoming) Special economic zones and growth in China and India: an empirical investigation, International Economics and Economic Policy. link
Thomas Farole, (2011) Special Economic Zones in Africa: Comparing Performance and Learning from Global Experiences'', Washington, DC, World Bank
External links
Шмонов Н.Н. «Историческое исследование проблем развития особых экономических зон»
Bangladesh Export Processing Zone Authority BEPZA
South Kazakhstan "Ontustyk" special economic zone
Indian Special Economic Zones
Export Processing Zones Authority Pakistan
PEZA Philippines website
India Special Economic zones map
Open Joint Stock Company "Special Economic Zones" (Russia)
U.S.S.R. Special Economic Zones
India: Citizens group demand moratorium on SEZs OneWorld South Asia
Foreign direct investment
Commercial policy
Economic development policy