HOME

TheInfoList



OR:

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 A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer (an individual or legal entity) by a governmental organization in order to fund government spending and various public expenditures (regional, local, o ...
, trading, quotas,
customs Customs is an authority or agency in a country responsible for collecting tariffs and for controlling the flow of goods, including animals, transports, personal effects, and hazardous items, into and out of a country. Traditionally, customs ...
and
labour regulations Labour laws (also known as labor laws or employment laws) are those that mediate the relationship between workers, employing entities, trade unions, and the government. Collective labour law relates to the tripartite relationship between employee, ...
. 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 A foreign direct investment (FDI) is an investment in the form of a controlling ownership in a business in one country by an entity based in another country. It is thus distinguished from a foreign portfolio investment by a notion of direct c ...
(FDI). The benefits a company gains by being in a special economic zone may mean that it can produce and trade
goods In economics, goods are items that satisfy human wants and provide utility, for example, to a consumer making a purchase of a satisfying product. A common distinction is made between goods which are transferable, and services, which are not ...
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 Labor rights or workers' rights are both legal rights and human rights relating to labor relations between workers and employers. These rights are codified in national and international labor and employment law. In general, these rights infl ...
.


Definition

The definition of an SEZ is determined individually by each country. According to the
World Bank The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Inte ...
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

Free zones and entrepôts have been used for centuries to guarantee free storage and exchange along trade routes. Modern SEZs appeared from the late-1950s in industrial countries. The first was in Shannon Airport in
Clare Clare may refer to: Places Antarctica * Clare Range, a mountain range in Victoria Land Australia * Clare, South Australia, a town in the Clare Valley * Clare Valley, South Australia Canada * Clare (electoral district), an electoral district * Cl ...
,
Ireland Ireland ( ; ga, Éire ; Ulster-Scots: ) is an island in the North Atlantic Ocean, in north-western Europe. It is separated from Great Britain to its east by the North Channel, the Irish Sea, and St George's Channel. Ireland is the s ...
."Political priority, economic gamble"
''
The Economist ''The Economist'' is a British weekly newspaper printed in demitab format and published digitally. It focuses on current affairs, international business, politics, technology, and culture. Based in London, the newspaper is owned by The Eco ...
''. 4 April 2015
Some tax-free jurisdictions such as the
Cayman Islands The Cayman Islands () is a self-governing British Overseas Territory—the largest by population in the western Caribbean Sea. The territory comprises the three islands of Grand Cayman, Cayman Brac and Little Cayman, which are located to the ...
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 Latin America or * french: Amérique Latine, link=no * ht, Amerik Latin, link=no * pt, América Latina, link=no, name=a, sometimes referred to as LatAm is a large cultural region in the Americas where Romance languages — languages derived ...
and
East Asia East Asia is the eastern region of Asia, which is defined in both geographical and ethno-cultural terms. The modern states of East Asia include China, Japan, Mongolia, North Korea, South Korea, and Taiwan. China, North Korea, South Korea ...
. The first in China following the opening of China in 1979 by
Deng Xiaoping Deng Xiaoping (22 August 1904 – 19 February 1997) was a Chinese revolutionary leader, military commander and statesman who served as the paramount leader of the China, People's Republic of China (PRC) from December 1978 to November 1989. Aft ...
was the Shenzhen Special Economic Zone, which encouraged foreign investment and simultaneously accelerated industrialization in this region. These zones attracted investment from multinational corporations. China continues to maintain Special Economic Zones and certain open coastal areas. Numerous
African countries This is a list of sovereign states and dependent territories in Africa. It includes both fully recognised states, states with limited or zero recognition, and dependent territories of both African and non-African states. It lists 56 sovereign state ...
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 China-Africa Development Fund, more commonly known as CAD Fund, is a Chinese private equity fund solely funded by China Development Bank, a Chinese government policy bank. The aim of the fund is to stimulate investment in Africa by Chinese c ...
). The
Forum on China-Africa Cooperation Forum or The Forum (plural forums or fora) may refer to: Common uses * Forum (legal), designated space for public expression in the United States * Forum (Roman), open public space within a Roman city **Roman Forum, most famous example *Interne ...
promotes these SEZs heavily.


Types

The term special economic zone can include: * Free-trade zones (FTZ) * Export processing zones (EPZ) *Free zones/ Free economic zones (FZ/ FEZ) *
Industrial park An industrial park (also known as industrial estate, trading estate) is an area zoned and planned for the purpose of industrial development. An industrial park can be thought of as a more "heavyweight" version of a business park or office park ...
s / industrial estates (IE) * Free ports *
Bonded logistics park A bonded logistics park is a type of special economic zone. Trade arrangements are similar to that of a bonded warehouse but over a specific geographic area. Sometimes with international port capabilities. Goods may be stored, manipulated, or un ...
s (BLP) * Urban enterprise zones The World Bank created the following table to clarify distinctions between types of special economic 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 Pape
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)



India: Citizens group demand moratorium on SEZs OneWorld South Asia
{{Authority control Special economic zones, Foreign direct investment Commercial policy Economic development policy