ABSTRACT

Special Economic Zones (SEZs) have become a popular development policy throughout the world over the last half a century. These zones form designated areas where governments offer businesses lower taxes, tariffs, and often lighter regulations. Generally, SEZs aim to attract investments and raise a country’s export and employment rates, but although success stories are often cited, there are numerous failed projects that have instead become burdens for their host countries.

This book examines SEZs from a political economy perspective, both to dissect the incentives of governments, zone developers, and exporters, and to uncover both the hidden costs and untapped potential of zone policies. Costs include misallocated resources, the encouragement of rent-seeking, and distraction of policy-makers from more effective reforms. However, the zones also have several unappreciated benefits. They can change the politics of a country, by generating a transition from a system of rent-seeking to one of liberalized open markets. In revealing the hidden promise of SEZs, this book shows how the SEZ model of development can succeed in the future.

Applying frameworks from various schools of political economy, this volume places SEZs in the context of their mixed past and promising future. It is essential reading for anyone with an interest in international economics, development economics, and political economy, including practitioners and consultants of SEZ policies.

chapter |19 pages

Introduction

part I|84 pages

The theory of zone politics

chapter 1|13 pages

The political economy context

chapter 2|31 pages

Are SEZs better than the status quo?

Knowledge and incentive problems with SEZs

chapter 3|25 pages

SEZs as drivers of reform

part II|49 pages

Case studies

chapter 5|15 pages

The problems of India’s SEZs

chapter 6|15 pages

How SEZs reformed China

chapter 7|16 pages

Dividing the Dominican Republic 1

part III|30 pages

The political economy of future SEZs

chapter 8|9 pages

Implications for SEZ policy makers

chapter 9|20 pages

The changing world of SEZs

chapter |2 pages

Conclusion