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 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. 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 co ...

(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 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 influen ...

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

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

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, Ireland."Political priority, economic gamble"
'' The Economist''. 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 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. 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 co ...

). The

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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 parks / industrial estates (IE) * Free ports * Bonded logistics parks (BLP) * Urban enterprise zones The World Bank created the following table to clarify distinctions between types of special economic zones:

References

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

Definition

History

Types

See also

References

Further reading

External links