Special Economic Zone

Special Economic Zone

A Special Economic Zone (SEZ) is a geographical region that has economic laws that are more liberal than a country's typical economic laws. The category 'SEZ' covers a broad range of more specific zone types, including Free Trade Zones (FTZ), Export Processing Zones (EPZ), Free Zones (FZ), Industrial Estates (IE), Free Ports, Urban Enterprise Zones and others. Usually the goal of an SEZ structure is to increase foreign investment. One of the earliest and the most famous Special Economic Zones were founded by the government of the People's Republic of China under Deng Xiaoping in the early 1980s. The most successful Special Economic Zone in China, Shenzhen, has developed from a small village into a city with a population over 10 million within 20 years. Following the Chinese examples, Special Economic Zones have been established in several countries, including Brazil, India, Iran, Jordan, Kazakhstan, Pakistan, the Philippines, Poland, Russia, and Ukraine. North Korea has also attempted this to a degree, but failed. Currently, Puno, Peru has been slated to become a "Zona Economica" by its president Alan Garcia. A single SEZ can contain multiple 'specific' zones within its boundaries. The two most prominent examples of this layered approach are Subic Bay in the Philippines and the Aqaba Special Economic Zone in Jordan.

In a recent comprehensive econometric study [http://www.degit.ifw-kiel.de/papers/degit_12/C012_042.pdf] on the SEZ policies in China and India, Leong(2007) investigates the impact of opening up the Chinese and Indian economy on economic growth in these countries using new panel data sets for both the national economies and the regional economies of China. The policy change to a more liberalized economy is explicitly identified using instrumental variables. The results provide support that export growth does have a positive and statistically significant effect on economic growth in these countries. However, the growth rates of these countries are export and FDI inelastic, in the sense that a one percentage point increase in growth rate of export or FDI will have a less than one percentage point increase in economic growth rate of these countries. In the case of the Chinese regions, the presence of export processing zones may exert positive effect on the regional growth rate but the increase in regional growth is even more export inelastic than at the national level. The result dispel the popular view that adopting a policy of more openness in the economy has a “multiplier” effect on economic growth. Of the two phases of liberalization in both countries, the second stage is statistically significant. One possible reason is that the scale of liberalization is greater in the second phase. Additionally, increasing the number of SEZs has very negligible effect on economic growth. Taken together, these results suggest that what contributes to greater growth is a greater scale of liberalization, rather than increasing the number of SEZs. __TOC__

According to World Bank estimates, as of 2007 there are more than 3,000 projects taking place in SEZs in 120 countries worldwide.

SEZs have been implemented using a variety of institutional structures across the world ranging from fully public (government operator, government developer, government regulator) to 'fully' private (private operator, private developer, public regulator). In many cases, public sector operators and developers act as quasi-government agencies in that they have a pseudo-corporate institutional structure and have budgetary autonomy. SEZs are often developed under a public-private partnership arrangement, in which the public sector provides some level of support (provision of off-site infrastructure, equity investment, soft loans, bond issues, etc) to enable a private sector developer to obtain a reasonable rate of return on the project (typically 10-20% depending on risk levels).


Currently, the most prominent SEZ's in the country are Shenzhen and Pudong, a district of Shanghai.


Considering the need to enhance foreign investment and promote exports from the country and realising the need that a level playing field must be made available to the domestic enterprises and manufacturers to be competitive globally, The Government of India had in April 2000 announced the introduction of Special Economic Zones policy in the country, deemed to be foreign territory for the purposes of trade operations, duties and tariffs. As of 2007, more than 500 SEZs have been proposed, 220 of which have been created. This has raised the concern of the World Bank, which questions the sustainability of such a large number of SEZs. The Special Economic Zones in India closely follow the PRC model.India passed special economic zone act in 2005

List of SEZs in India

The policy provides for setting up of SEZs in the public, private, joint sector or by State Governments. It was also envisaged that some of the existing Export Processing Zones would be converted into Special Economic Zones. Accordingly, the Government has converted Export Processing zones located at
* Sricity, Andhra Pradesh (http://www.sricity.in)
*Visakhapatnam (Andhra Pradesh)
* Hyderabad (Andhra Pradesh)
* Polepally (Andhra Pradesh)
*Ahmedabad, Baroda, Kandla and Surat (Gujarat)
*Cochin (Kerala)
*Pithampur (Madhya Pradesh)
*Nagpur also refer MIHAN, Pune and Santa Cruz-Mumbai (Maharashtra)
*Chennai, Ilandaikulam Madurai, Nanguneri and Tirunelveli (Tamil Nadu)
*NOIDA, Greater NOIDA (Uttar Pradesh) UP
*Falta (West Bengal)

Currently, India has 1022 units in operations in 9 functional SEZs, each an average size of convert|200|acre|km2. 8 Export Processing Zones (EPZs) have been converted into SEZs. These are fully functional. All these SEZs are in various parts of the country in the private/joint sectors or by the State Government. But this process of planning and development is under question, as the states in which the SEZs have been approved are facing intense protests, from the farming community, accusing the government of forcibly snatching fertile land from them, at heavily discounted prices as against the prevailing prices in the commercial real estate industry. Also some reputed companies like Bajaj and others have commented against this policy and have suggested using barren and wasteland for setting up of SEZs.the special economic zones

Attempts to set up a Special Economic Zone in Nandigram have led to protests by villagers in the area. A Parliamentary Committee to study and give recommendations on SEZs has said that no further SEZs be notified unless the existing law is amended to incorporate the changes related to the land acquisitions.

Genpact has announced its plans to expand its presence in Hyderabad by setting up a Special Economic Zone (SEZ) across 50 acres in the city at Jawahar Nagar.

PointIndu has inaugurated Hyderabad by setting up a Special Economic Zone (SEZ) across 150 acres near Shamshabad close to airport.



*Arg - e - Jadid Special Economic Zone: Vehicle Manufacturing Hub.
*PetZone: Petrochemical special economic Zone, Mahshahr.
*Kish: Kish island special economic zone.
*Shahid Rajaee Port [http://www.shahidrajaeeport.ir/]
*Amirabad Special Economic Zone [http://www.pso.ir/Portal/HomePage.aspx?TabID=0&Site=Amirabad&Lang=en-US]
*Bushehr Port



North Korea

The "Rajin-Sonbong Economic Special Zone" was established under a UN economic development programme in 1994. Located on the bank of the Tuman River, the zone borders on the Yanbian Korean Autonomous Prefecture (or, Yeonbyeon in Korean) of the People's Republic of China, as well as Russia. In 2000 the name of the area was shortened to Rason and became separate from the North Hamgyeong Province.


Taking the example of the Chinese success with their SEZs, China is helping Pakistan develop the Haier-Ruba economic zone on the outskirts of Lahore.

Other economic zones include the China-Pakistan economic zone open only to Chinese investors and also the future crown jewel of Pakistan, Gwadar.

There are also talks of creating a Japanese city for foreign investors from Japan only.

There has also been new SEZ proposed on the currently under construction Sialkot-Lahore motorway, Qatar has proposed an investment for $1 billion in a new SEZ along the motorway.

There is also a new zone under construction in Faislababd, which will be the biggest industrial estate of Pakistan when complete, it has sections for each country and the first phrase is already complete with a special Chinese zone in it.


Philippine economic zones (ecozones) are collections of industries, brought together geographically for the purpose of promoting economic development. Although designed to operate separately from the political and economic milieu of surrounding communities, Philippine economic zones do in fact interact with their neighbors. There are 41 private-owned economic zones and 4 government owned economic zones in the Philippines. Of the 41 private economic zones, the biggest exporter is Gateway Business Park in General Trias, Cavite and the second biggest private ecozone is Laguna Technopark Inc. The four governmentally owned are Cavite Economic Zone, Bataan Economic Zone, Mactan Economic Zone and Baguio City Economic Zone. Thus it is a useful act for the growth of economic zone of the country.

List of SEZs in the Philippines

*Subic Bay Metropolitan Authority
*Clark Special Economic Zone
*Philippine Economic Zone Authority
*Phividec Industrial Authority
*Zamboanga City Special Economic Zone Authority
*Cagayan Economic Zone Authority


*Kamiennogórska SSE
*Katowice Special Economic Zone
*Kostrzyńsko-Słubicka SSE
*Krakowski Park Technologiczny
*Legnicka SSE
*Łódzka SSE
*Słupska SSE
*SSE Starachowice
*Suwalska SSE
*Pomorska SSE (Pomeranian Special Economic Zone)
*Tarnobrzeska SSE
*Wałbrzyska SSE
*Warmińsko-Mazurska SSE


Technical/Innovational Zones

* Dubna
* Zelenograd
* "Noidorf" ( _ru. Нойдорф) - industrial and business park in special economic zone in Strelna near Saint Petersburg, Russia
* "Novo-Orlovskoe" ( _ru. Ново-Орловское) - SEZ territory in Saint Petersburg, Russia
* Tomsk

Industrial/developmental Zones

* Yelabuga
* Lipetsk

Tourist Zones

* Krasnodar Krai
* Stavropol Krai
* Kaliningrad Oblast (Yantar, Kaliningrad Special Economic Zone)
* Altai Krai
* Altai Republic
* Irkutsk Oblast
* Buryatia


Special Economic Zones existed in Ukraine until March 31, 2005. The first created was the Nouth-Crimean Experimental Economic Zone Syvash (since 1996). From 1998 to 2000 11 new zones were created.


Chee Kian Leong,2007, A Tale of Two Countries: Openness and Growth in China and India [http://www.degit.ifw-kiel.de/papers/degit_12/C012_042.pdf] , Dynamics, Economic Growth, and International Trade (DEGIT) Conference Paper.

External links

* [http://newsrack.in/Browse.do?owner=subbu&issue=Land+Issues&catID=1 Regularly updated news about SEZs in India] [http://www.sezlease.com/ Indian Special Economic Zones]
* [http://www.rosez.ru/ Russian Special Economic Zones]
* [http://www.margswarnabhoomi.com/ Indian SEZ]
* [http://www.peza.gov.ph/about_peza.htm PEZA Philippines]
* [http://www.indiatogether.org/2006/dec/dsh-mahasez.htm/ The New Maharajas of India]
* [http://www.economiczones.mapunity.org/ India Special Economic zones map]
* [http://www.rosoez.ru/ Federal Agency for Management of Special Economic Zones (Russia)]


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