Risks of promoting SEZs in low-income countries and what strategies will enable developing countries to minimise those risks
Special economic zones (SEZs) or industrial parks can be an effective instrument to promote industrialization and structural transformation, but only when implemented properly in the right context. More than 50 years of experience with special export zones yields a mixed picture. There are notable successes, particularly in Asia and Latin America, and disappointments, more common in Sub Saharan Africa.
This uneven record fuels a debate about the rationale and justification for using SEZs as an instrument for economic development. What are the global lessons from the use of SEZs in the broader effort to achieve structural transformation? Are the zones effective in promoting private-sector development? What are the risks of promoting SEZs in low-income countries, and what strategies will enable developing countries to minimise those risks and harness the power of SEZs to stimulate growth? This paper by Douglas Zhihua Zeng (2016) addresses these questions, and sheds light on the key issues for policymakers in developing countries.
This research was funded under the Private Enterprise Development in Low-Income Countries (PEDL) Programme.
Douglas, Z. Z. (2016) Special Economic Zones: Lessons from the Global Experience, PEDL Synthesis Paper Series, No. 1.