Special Economic Zones research
A description of Special Economic Zones (SEZs) and their role in creating a favorable environment for startups and innovations.
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from 79 SEZs in 1975 to 5,400 in 2018 – the exponential growth of Special Economic Zones paints a trajectory.
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map and stats
UNCTAD report on Special Economic Zones (SEZs)
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There are over 5,400 SEZs in 147 countries as of 2019. Over 500 more are planned.
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Developing countries account for 95% of SEZs worldwide. China alone hosts over half of all SEZs.
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Zones are estimated to employ directly 90-100 million people worldwide.
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SEZ exports account for over 50% of total exports in some developing countries.
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In some countries, over 80% of cumulative FDI is in SEZs.
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The average economic growth rate of SEZs surveyed was 14.7% over 2007-2012. However, most SEZs grew at below national GDP growth rates.
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63% of SEZ laws list quantitative growth objectives like investment, exports and jobs as the goal. Only 27% mention wider development impact.
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Almost 80% of laws provide fiscal incentives, 94% allow special customs regimes and 41% have investment facilitation tools.
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Environmental and labor regulations are often weaker in SEZs compared to national standards.
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Going forward, trends like sustainability, digitalization and changing global value chains will require reorienting and upgrading SEZs.
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full report: https://drive.google.com/file/d/1RxMBzY901siQAIaC6fjD4KO_CP-FFhwi/view
sceptic // World Bank Group // Special Economic Zones An Operational Review of Their Impacts
Summary of Findings:
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Literature on SEZs often focuses on successful cases, raising questions about the generalizability of these successes across different contexts.
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SEZs are recognized for attracting FDI, boosting new businesses, and enhancing exports, with SEZ-based firms generally outperforming non-SEZ firms.
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The impact of SEZs on job creation and regional spillovers is less clear, with success heavily dependent on the broader context and supporting policies.
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A new dataset was created for the study, covering 553 zones in 51 countries, with an econometric analysis of 346 zones in 22 countries.
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Nightlights data was used as a proxy for economic activity, representing an innovative method, though not without its limitations and controversy.
Key Conclusions:
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SEZs typically do not outperform the economic growth of their host countries.
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Sustaining economic growth within SEZs over time is challenging, with high-tech-focused zones struggling more than those in labor-intensive sectors.
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Larger zones tend to show more growth potential.
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The effectiveness of incentive packages and management schemes in SEZ success is limited.
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SEZs can influence growth in surrounding areas up to a 50 km radius, beyond which their effect diminishes.
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SEZs in poorer areas with proximity to large cities and accessible markets exhibit more economic dynamism.
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The role of tax breaks and other incentives in SEZ success is more context-dependent than previously thought.
Policy Implications:
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SEZ policies must be aligned with broader structural reforms to enhance development and absorptive capacity within the country/region.
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Proximity to markets and the existing economic predisposition are crucial; cost advantages remain a significant factor in attracting firms.
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The success of SEZ programs is highly context-dependent, with no one-size-fits-all solution.
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Flexibility in choosing the SEZ location significantly increases the likelihood of success.
Recommendations for SEZ Programs:
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Implement supporting programs to increase positive spillovers from SEZs.
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Use satellite imagery judiciously as a proxy for impact assessment, but not as a substitute for comprehensive analysis.
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Impact assessments should be integrated into project designs and financed accordingly to demonstrate the benefits and ensure sustainability.
This summary captures the nuanced understanding of SEZ performance and provides a foundation for discussing the establishment of a Venture Builder Protocol using SEZs. The insights can guide the workshop's focus on how web3 tools might address some of the limitations and enhance the potential of SEZs.
full report: https://drive.google.com/file/d/1VZ13PgYRoyckVXHA_6RtrKJugSSjCUc3/view