Publication: The Dos and Don’ts of Special Economic Zones
Date
2021-12-06
ISSN
Published
2021-12-06
Author(s)
Zeng, Douglas Zhihua
Abstract
Special economic zones (SEZs) have
been used by many developing countries as a policy tool to
promote industrialization and economic transformation. The
World Development Report 2020 also recognizes the
possibility of using SEZs as a means of facilitating global
value chain participation. As a "high-risk,
high-reward" instrument, the global results of SEZs in
developing countries are quite mixed. Results vary
significantly with some regions or countries. As an
industrial policy tool, an SEZ is supposed to complement
market forces by helping to overcome market failures. Zone
approach is both necessary and feasible, the host government
also needs to decide what type of zone is the most suitable.
There are typically two types of zones despite the many
names they are given: SEZs and industrial parks. SEZs often
involve a “special” legal and regulatory regime, and may be
appropriate in case the main constraints are related to
legal and regulatory issues that affect the business
environment besides other constraints, such as land and
infrastructures. In other cases, a simple alternative to an
SEZ is an industrial park, which does not require a special
legal and regulatory regime. In such cases, an industrial
park may be more appropriate because it involves less
complex and risky processes. Therefore, depending on the
specific development objectives and constraints, an SEZ can
be considered together with other possible options, though
this note will mostly focus on SEZs.
Citation
“Zeng, Douglas Zhihua. 2021. The Dos and Don’ts of Special Economic Zones. Equitable Growth, Finance and Institutions Notes;. © World Bank, Washington, DC. http://openknowledge.worldbank.org/handle/10986/36663 License: CC BY 3.0 IGO.”