The Political Economy of Special Economic Zones




Moberg, Lotta Malin Johanna

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Special economic zones (SEZs) are a wide-spread and increasingly popular tool for economic growth. Big or small, secluded or isolated, they are areas where a government allows for different rules to apply than the rest of the country. Most commonly, this means granting fiscal privileges to investors in the zones. Exemptions from taxes, tariffs, and sometimes regulations mean that SEZs form islands of economic liberalization in a country. A common attitude to zones is therefore that while broader liberalization is preferred, SEZs always benefit a country as long as they bring about this marginal improvement. The skeptical view of SEZs is that their geographically limited reach means that they are always somewhat misguided. If SEZs bring good policies, their geographical limitation only implies that these are underprovided.



Economics, Development, Export Processing Zones, Political Economy, Rent-Seeking, Robust Political Economy, Special economic zones