The Political Economy of Special Economic Zones

Lotta Moberg

Abstract

This paper is a first attempt to apply a robust political economy framework to explain when
Special Economic Zones (SEZs) can contribute to economic development. In a robust
political economy, institutions channel the actions of self-interested individuals to promote
economic progress. SEZs can promote economic growth, but tend in the wrong institutional
context to foster misallocated investments and skewed incentives. Policy makers that
introduce SEZ must overcome the knowledge problem to avoid misdirected economic
planning. Yet, the scheme can only fulfill its purpose if they also overcome the incentive
problem. That means avoiding destructive rent-seeking behavior, both from businesses and
from government authorities. The political economy framework of SEZs can be applied to
judge their potential efficacy, something that orthodox studies of country features such as
natural resources, education level or zone location fail to do. The Indian and Chinese
experiences with SEZ illustrate these points.

Keywords: Special Economic Zones, Political Economy, Economic Development, Economic

Calculation, rent-seeking.

JEL codes: B52, B53, H25, O24, O43, P26.

Lotta Moberg
George Mason University
Department of Economics
Fairfax, VA; United States
[email protected]
703-732 2172

1
1 Introduction
Special economic zones (SEZs) are superior to many growth policies. Several countries
successfully used SEZs to encourage economic development in a dynamic and market
compliant way. SEZ programs have on the other hand been utterly unsuccessful in many
countries. This paper is an attempt to understand why some zone schemes succeed and others
fail in promoting economic growth.

SEZs can encourage investments, often by offering a more liberalized business climate, with
lower taxes and tariffs, and less stringent regulations. A business community that flourishes in
a zone can have great positive externalities with the potential to pull the rest of the country on
a path of faster economic development. SEZs can spur technological know-how, alleviate
unemployment and even contribute to countrywide policy reforms. China‟s economic
liberalization, with massive poverty alleviation as a result, is attributed in part to the
implementation of the SEZ concept.

It is a conundrum that some SEZs, despite their potential, have not seemed to make much
difference, and in some countries even become drags on the economy. For instance, the
Philippine authorities invested in lots of infrastructure for their zone in Bataan. The port was
upgraded, a new damn was constructed for energy supply and new fancy office buildings
were erected. Yet for long, the zone failed to attract much business, rendering the project a big
and very expensive failure for the government (Warr, 1987; FAB 2013).

Explanation of SEZ success or failure often concern the quality of the infrastructure, location
and the zones‟ areal size (Farole, Akinci, 2011: 221; Pradeep, Pradeep, 2008). Bad roads and
unreliable power supplies deter foreign investors. Inappropriately designed facilities in zones
cause congestion or social problems. Other problems include inadequate maintenance, zone
promotion, policy coordination and tax incentives, as well as excessive performance
requirements (FIAS, 2008: 5, 50). The alleged problems with the export processing zone in
Dakar, the capital of Senegal, were an excessive bureaucracy, high electricity costs and a lack
of a sufficiently cheap labor force. In addition, the location was poorly selected, far away
from the port of Dakar and isolated from major trading routes (Cling, Letilly, 2001: 22).

Successful zones on the other hand, are well connected to the domestic market, with zone
investors drawing production factors from domestic sources (Farole, Akinci, 2011: 217).
Locations near urban areas, national borders and skilled labor as well as good timing are other
cited recipes for success (Yuan, Eden, 1992). Sometimes, SEZ success is simply attributed to

2
policy makers targeting “the right industry”. For instance, while zones geared towards high-
technology businesses have been successful in some countries, this was not the case in
Bangladesh. Only when the authorities allowed garment producers to invest in its zones did
they attract significant investment (Farole, Akinci, 2011: 41). It seems there are as many
explanations of a zone‟s success or failure as there are zones. Different SEZ models are
simply relevant in different contexts (Farole, 2011a: 2).

The source of the confusion in explaining SEZ success lies in how success is defined. Studies
measuring SEZ success look at employment, FDI, export and production growth in the zones
as indicators. They compare such aggregate statistics to previous trends and to the rest of the
country (e.g. FIAS, 2008: 35). A cost-benefit analysis may compare the gains against the cost
of establishing SEZs (Warr, 1989: 66). Jayanthakumaran (2003: 63) argues that a cost-benefit
analysis shows that the zone programs in South Korea, Malaysia, Sri Lanka, China and
Indonesia are “economically efficient and generate returns well above the estimated
opportunity cost”.

These methods however fail to account for the dynamic effects of SEZs. They obscure the
spread of knowledge from foreign corporations to domestic business as well as the zones‟
propensity to lead to countrywide economic reform. Since many SEZs tend to change, adjust
and expand, they are better described as processes than fixed policy packages. SEZs must be
considered successful when they have a positive effect on the economy in the long-run.

The conventional explanations for SEZs fail to address the underlying causes of success, and
are rather depictions of the result of successful or failed SEZ schemes. If the “right” industries
should invest in SEZs, the question remains who is to determine what those industries are.
While good infrastructure helps attract businesses, we need to ask what allows for the
discovery of the right location for those roads, bridges and buildings. Successful SEZs require
that decision makers can find the proper policies for the zones and have the incentive to
implement them more widely. They must in other words both overcome a problem of
knowledge and one of incentives.

A robust political economy framework is a tool for analyzing when the right policies can
come about. In an ideal world, policy makers are both omniscient and benevolent social
wealth maximizers. They declare the optimal economic policies and have no problems
pursuing them. In this world, SEZs cannot fail, or can only do so under highly unlikely and

3
unfortunate circumstances. A political economy analysis relaxes assumptions about perfect
knowledge and benevolence (Boettke, Leeson, 2004: 101; Pennington, 2011: 3).

When both market actors and public officials are imperfect in their knowledge and
motivations, economic coordination relies on the right institutional context (Pennington,
2011: 2). A robust political economy is one that yields beneficial outcomes despite the flaws
of policy makers and people in business. Its institutions channel the actions of self-interested
and badly informed people into activities that increase social welfare. In a market, a robust
political economy drives people to enrich themselves by serving one another (Hayek, 1960:
76). In politics likewise, the right institutions drive self-interested policy makers to institute
policies that increase welfare.

A robust political economy analysis helps us understand when a seemingly successful SEZ
may in fact be a drain on the economy. SEZs look successful when they attract businesses, but
they may simply be located in an area naturally disposed for high growth or in a
developmentally progressive country. That does not mean that the SEZs are a net positive to
the economy. Governments can also create seemingly successful SEZs by transferring
resources from other areas to the designated zone. More wealth being located in the zones
does not make it a good growth strategy. Also, countries that have SEZs often grow for
reasons unrelated to their zones. SEZ “success” is thus not synonymous with economic
growth countrywide or even in the zone itself. The relevant metric is whether an SEZ makes a
positive long-term contribution to a county‟s economy. For this to happen, decision makers
must be able to discover the right policies and zone locations, and have the incentive to
institute them.

All policies introduced under non-robustness are not economically damaging. Sometimes
policy-makers are lucky and get it right. Some policy makers do have benevolent motives
with introducing SEZs. Yet, under non-robust institutions, imperfect knowledge and policy
makers‟ self-interest bias policies towards other ends than economic prosperity. Finally, a
robust political economy analysis of SEZs does not reveal whether the SEZ scheme is the best
development strategy amongst all other options. What is can tell us is whether the policy
should yield benefits, given that a country chooses the SEZ path. That may seem a modest
claim, but institutional robustness is a crucial safeguard against policy makers with imperfect
knowledge and self-interested motives inflicting harm to the economy with their policies.

4
After an overview of the SEZ concept in Section 2, Section 3 explores the robust political
economy framework for SEZs. Section 4 further illustrates the political economy implications
by studying the Chinese and Indian experience with SEZs, and Section 5 concludes.

2 The SEZ concept

The concept of areas with special privileges has been around at least since the 16th century but
the first modern SEZ was founded in Ireland in 1959 (Guangwen, 2003). By 1975, there were
a total of 79 SEZs in 25 countries (ILO, 2007). In the 1980s, after China‟s economic reforms,
SEZs gained popularity and they have since 1990 been adopted worldwide. By 1995, there
were around 500 SEZs in the world, a number that only a decade later was estimated to
between 3,000 and 5,000 zones. The majority of SEZs are located in developing countries
(Carter, Harding, 2011: 8). Some noteworthy SEZs making the news lately are projects in
Kenya, Belarus, Myanmar, Laos and China.1

SEZ businesses usually enjoy benefits such as lower tariffs and taxes. Many zones also offer
lower environmental requirements, looser labor regulations and other policies that lower the
cost of doing business. Some SEZ authorities even have the autonomy to determine their own
tax and regulatory policies or have their own judicial system. In other countries in contrast,
national governments set the rules and may impose requirements on SEZ firms regarding their
type of production, degree of foreign ownership and how many domestic workers they must
employ. With enough such requirements, many SEZs resemble state planned industrial
clusters, rather than liberalized free zones. SEZs can therefore both be spaces under more and
less government control than the rest of the country.

SEZs take on different names depending on such things as the businesses they focus on or the
markets firms can access. Free trade zones may offer facilities for storage, transshipment and
redistribution while export processing zones (EPZs) are mainly for manufacturing and
exporting industries. Zone status can be granted single enterprises to constitute so called
“single factory zones”. Free ports are generally large and diversified (FIAS, 2008: 3, 10;
Costachie, 2008; Farole, Akinci, 2011: 2). While this way of differentiating between zones
may be useful when studying certain industries or trade policies, conventional labels offer

1
News articles are available at http://allafrica.com/stories/201306200154.html;
http://news.belta.by/en/news/econom?id=701579; http://www.mmtimes.com/index.php/national-news/3213-sez-
development-project-links-myanmar-thailand-at-asean-summit.html; http://www.nationmultimedia.com/aec/Laos-special-
economic-zone-attracts-investors-30215777.html; http://www.bbc.co.uk/news/business-24322313 (all accessed Oct. 13,
2013).

5
little guidance for an analysis of the political economy of SEZs and their institutional context.
Therefore, “Special economic zones” (SEZs) will henceforth be used as a general term.

SEZs can spur economic growth through different mechanisms. Better conditions for
businesses attract more foreign direct investment (FDI) by multinational corporations.
Domestic businesses relocate to zones with more liberal policies than the rest of the country.
Firms that form clusters in zones can benefit from network effects and economies of scale
(Porter, 1998; Porter, 2000; Harrison, 1992: 27). Many zones both create employment
opportunities directly, and indirectly by increasing the demand for domestic production
factors. In addition, new international enterprises investing there may spread technological
expertise outside zone boundaries (FIAS, 2008: 32).

It might seem strange that governments do not implement beneficial policies nationwide
rather than confining them to certain areas. Three explanations for this are worth considering.
One is that zones form clusters that would not come about otherwise, due to the inability of
businesses to coordinate their locations as effectively (Farole, Akinci, 2011: 147-8).2 Second,
governments do not know the effects of certain policies, and SEZs provide test grounds to try
them out (Sit, 1985: 84). Third, nationwide reforms are infeasible due to resistance from the
political elite or from the public. SEZs may then be a politically realistic second-best policy
option. The robust political economy analysis in this paper will test the validity of these
arguments.

3 Robust political economy

The problems of inadequate knowledge and adverse incentives are at the very heart of a
robust political economy framework. I address these problems in turn to examine how SEZs
can be introduced in an institutionally robust context.

The knowledge problem

Picture for a moment a group of policy makers scratching their heads over the task of finding
the best model for a new SEZ. Assuming that they are all benevolent social welfare
maximizers allows us to focus on their problems with inadequate information (Ikeda, 2005:
35). The knowledge problem means that government bureaucracies are unable to promote
technological progress by planning economic production and resource allocation (Lavoie,
1985: 52-54). Because they cannot amass all the needed information, they are unable to

2
This coordination problem is a classical argument for state involvement in industrialization; see Rosenstein-Rodan (1943).

6
calculate the most efficient structure of production or plan the organization of cooperative
creation. Not only is the knowledge that they would need dispersed throughout the society. It
is also of the kind that cannot be communicated to others in a useful way (Hayek, 1945). A
functioning market depends on intuitions that entrepreneurs and investors can accrue only
through years of practice.

The SEZ planners may realize the contradiction in their task of finding the optimal zone
location. Any site is unlikely to be profitable for investment if market entrepreneurs have not
found it as a good location for investment already. Lower taxes will surely bring some firms
to the zone, but this may just result in a wasteful relocation of current economic activity
within the country. This dilemma is much alike that of other forms of industrial policy. To
benefit the economy, government officials need to have insights that private actors lack about
how best to allocate resources and where to pursue investments. Since this is seldom the case,
governments that intervene in the economy with public resources see unintended and possibly
damaging consequences but little growth (Ikeda, 2005; Kirzner, 1985: 123; Mises, 1977: 25) .

The argument against this skepticism to government interventions is that government

interventions can support the formations of industrial clusters. As a government policy
however, cluster formation is prone to the same failure as other government interventions
(Desrochers, Sautet, 2004). The knowledge necessary to coordinate clusters that add value is
not in the hands of policy makers but of market actors. As a result, governments tend for
example to promote more high tech clusters than is compatible to their countries‟ comparative
advantage (Davies, Ellis, 2000). Clusters do not cause economic growth but rather form as a
result of a sector‟s progress (Martin, 2001; Seshadri, Storr, 2010: 362). No one can really
predict where the industrial centers of the future will locate or what they will produce, since
clusters tend to form spontaneously from private market coordination (Miller, Cote, 1989).
The claim that governments facilitate cluster coordination by investing in SEZs is therefore
not convincing.

Although governments are not in the position to choose proper SEZ locations and industries,
SEZ schemes do not have to succumb to this knowledge problem. There are ways that they
can delegate these crucial decisions to people of adequate knowledge.

7
Private decision making

The knowledge problem emerges when decision making is trusted to policy makers with
inadequate understanding of market conditions. They can however avoid the problem by
shifting this role to market actors. SEZ planners who want to target specific industries can
overcome the knowledge problem by not specifying the location of zone investors. Several
countries, including Mauritius, Fiji, Togo, Senegal, Cameroon, Nigeria Kenya and Honduras,
even allow “zone status” to single firms or factories, with all the privileges that entails
(Costachie, 2008: 145; Carter, Harding, 2011: 3; Farole, 2011b: 42; Engman, 2011: 49). Since
the single-firm zone deviates from the traditional notion of a zone, it is less commonly
described as an SEZ. The strength of such schemes is however, that private investors in a
particular industry are allowed to find proper locations for their production. Governments can
therefore solve the knowledge problem by not limiting businesses to particular areas.

Government officials can also choose zone location but let the private sector determine which
industries to locate there. This division of decision making can also avoid the knowledge
problem. Governments do not need to pick market winners and losers to create economic
zones for growth (Auty 2011: 213). However, as long as the government is financing zone
development, this does not insure against wasting public funds. Resources are easily
misallocated when SEZ planners spend lavishly on infrastructure, such as roads, energy
supply and telephone lines. The SEZ planners may want to avoid the embarrassment that the
area is left idle if it turns out not to be an attractive location for businesses. Yet, while the SEZ
appears successful if it attracts business, the benefits they bring may not outweigh the costs.

The SEZ planners should therefore exploit the knowledge of private investors further, and
demand that the private sector pays for the infrastructure. This is the model of many “private”
SEZs, which in general have shown better result than those relying on government
investments (FIAS, 2008: 4). When market entrepreneurs make the full investment decision,
their self-interest drives them to limit their ventures to wealth increasing projects. SEZs are
therefore more likely to succeed as voluntary entrepreneurial projects than as political
schemes (Pennington, 2011: 205).

There is a chance of course that private investors will not take on this development task.
Many places will need to provide more than the lower tariffs and taxes that SEZs may offer,
such as natural resources, stable environment and good institutions (Morriss, Moberg, 2012:
12, 57). This fact may make the private zone model less politically attractive for government

8
officials, but it is economically prudent. If investing firms miscalculate, the loss accrues to
them and not on the country‟s taxpayers. If the SEZ is misplaced and unattractive, it will be
miserably empty but with no losses incurred on the hosting country. Even smaller private
zones are therefore superior to those that are slightly more developed and vastly more
expensive. The small SEZs in Sri Lanka have been described as a failed project (Prihodko et
al., 2007: 149; Madani, 1999: 106). On the other hand, they received little public investment
in the form of warehousing, transport infrastructure and standard factories (Aggarwal, 2005:
37). In a simple cost-benefit sense, the Sri Lankan zones may therefore have generated returns
above their opportunity costs despite their flaws (Jayanthakumaran, 2003: 63).

Private SEZs are becoming more popular (FIAS, 2008: 7). The Philippines saw their first
private SEZs in 1991. Since then, the number of private zones in the country grew rapidly, to
76 zones in 2008 compared to only seven public ones (Id: 64). Many of the successful SEZs
in Central America and the Caribbean‟s in the 1980s and in Southeast Asia in the 1990s
enjoyed little government planning and support (Id: 26). In the Dominican Republic, most
private zones have clustering around the capital, with good access to high skilled labor and
good infrastructure. The government-developed zones meanwhile are located outside the
capital in an effort to encourage regional development (Id.: 46). When the Honduran
government granted SEZ access to more foreign investors, private zone investments increased
to overtake the publicly operated zones. In 2011, only one public zone remained, hosting a
mere 11 companies (Engman, 2011: 59).

Decentralized political decision making

Political realism tells us that empty or undeveloped zones do not look good in photographs.
The SEZ planner may therefore be reluctant to rely on the private sector for zone
development. Fortunately, there may be another way to avoid the knowledge problem, namely
through sufficient decentralization of government decision making. Local governments,
which are often well oriented in local conditions, may have a sufficiently good understanding
about a zone‟s potentials. Local bureaucrats can also observe how conditions change on the
ground and more rapidly decide on policy changes. They can thus mimic the reactions of
private investors to market dynamics.

Local zone regulators can also be more entrepreneurial and radical when designing and
implementing policies (Farole, Kweka 2011: 5). For instance, the decentralized system of the
United Arab Emirates allowed the ruler of Dubai to determine that their financial center

9
would have British common law, rather than the Shari‟ah law that prevails in the rest of the
country. This allowed it to attract multiple businesses that would have been reluctant to work
within the restrictions of Islamic finance (Strong, Himber, 2010).

Decentralization also lets zone authorities test very different models. They can observe and
copy policies that work elsewhere and thus learn from other SEZs. They are less likely
therefore to severely miscalculate the effects of different policies. One mistake by a zone
regulator furthermore, affects one SEZ in the country rather than all of them, like in the case
with national SEZ policies. Local policy makers can act like market entrepreneurs and
introduce policies in a trial-and-error fashion, making SEZs into test-beds for policymaking.
As I discuss later, this dynamic was a driving force behind China‟s gradual reform. Malaysia,
Jamaica, Kuwait, and Jordan have also used their SEZs as test-beds to demonstrate the impact
of different policies (FIAS, 2008: 50).

The dynamic that decentralization fosters encourages the introduction of more SEZs, which
can ultimately lead to national policy reforms. Cling and Letilly (2001) observe several cases
in Asia where the success of one zone encouraged the introduction of another. Several Asian
countries ultimately abandoned the model of low-tariff SEZs when they opened up to trade.
As SEZ policies spread nation-wide, zones become decreasingly “special”. In Central
America, Honduras expanded its SEZ program several times since its launch in the 1970s,
until the government in 1998 declared the whole country a “free zone area” (Farole, Akinci,
2011: 49).

The diminishing importance of SEZs is often an indication that they are reshaping national
policy. Due to national reforms, South Korea‟s manufacturing zones became increasingly
irrelevant, contributing only 2.9% to exports of manufacturing goods by 1985 (Burman, 2006:
11). Similarly, in Taiwan new investments in the zones had virtually dried up by 1980, as
infrastructure and duty-free arrangements improved throughout the country (Id.: 10).

Two of the arguments presented in Section 2 for why governments introduce SEZs rather than
take on nationwide economic reforms have merit. It is possible that policy makers do not
know the effects economic reforms, and therefore use SEZs to try them out. Testing policies
on a smaller scale can also be a way to overcome political resistance, whether by the people
or the political elite. SEZ policies can become showcases for reforms and convince people in
power of their benefits.

10
The incentive problem

Solving the knowledge problem is not sufficient for a well functioning SEZ program. Like
other policies that offer special privileges, SEZs create opportunities for rent-seeking and
hence the incentives for policy makers to use them for personal gains. Policy makers therefore
need the incentives to promote economic growth, if they are to enact beneficial reforms
(Reder, 1982: 25).

To explore the incentive problem, we relax the assumption that the SEZ planners are
benevolent. Government officials pursue higher salaries, benefits and social status.
Democratically elected politicians want public support and votes in the next election, while
bureaucrats seek prestigious titles, larger offices, bigger staff, more leisure and the occasional
trips to a pleasant resort on behalf of their agency. Self-interest is not a problem in the right
institutional context, but the wrong institutions will lead officials to pursue their personal
goals by means of rent-seeking and corruption. Besides an opportunistic profiteering from
rent-seeking businesses, policy makers may introduce policies like SEZs to create rent-
seeking opportunities (Wallis, 2006: 25).

To profit from SEZs, their regulators can for instance allow procurement contracts to those
offering the highest bribes, or demand bribes from the companies investing in the zone.
Government policy makers may extract bribes and favors from local officials who are eager to
see their town being designated a special zone. They can also use SEZs to alleviate pressure
for economic reform that would threaten their rent-seeking revenues elsewhere. SEZs can
therefore serve to isolate economic liberalization and openness away from officials‟ rent-
seeking turfs.

Even if the highest-ranking people in government refrain from using SEZ schemes in this
way, the policy may still be hostage to rent-seeking if the incentives of the executing
bureaucracy are not right. Bureaucrats can increase costs by claiming higher expenses than
necessary for the project (Niskanen, 1971) or waste public funds by shirking on the job
(Tullock, 1965). Bureaucrats can demand bribes from the SEZ businesses or give zone
infrastructure contracts to people who are willing to pay them for the privilege. Infrastructure
obtained this way will likely be of poor quality. It may end up costing more to maintain than
the economic benefits it brings, or even remain idle (Farole, Akinci, 2011: 4). SEZs thus
attract corruption much like other massive governmental infrastructure investment schemes
that demand large amounts of resources (Beaulier, Subrick, 2006).

11
The more layers of corrupt agencies that a firm must pass to obtain various permits, the higher
is the risk that it will pay more in bribes than it makes in profits (Shleifer, Vishny, 1993). If
each bureau extracts as much as it can from a business, SEZs can become common pools of
graft for bureaucrats, making the system unpredictable and opaque for investors (Easterly,
2002: 247). Such disbursed and anarchic corruption can kill economic growth (Frye, Shleifer,
1997).

If the SEZs are designed to serve as vehicles for corruption, they will be inherently difficult to
reform into successful SEZs. The experience with SEZs in Russia in the 1990s exemplifies
what happens when zones are at the center of corruption and criminal activity. The legal
environment in their SEZs ended up even more insecure for investments than the rest of the
country. A reform in 2005 aiming to discourage corruption saw the Russian government
introducing SEZs with more federal regulation and less tax benefits. While the corruption
seems to have diminished, little productive economic activity has blossomed in its place. The
reforms did also not change the public perception of the zones in Russia as centers of
corruption (Tuominen, Lamminen, 2008: 11-12).

Robust rent-seeking?

It seems plausible that SEZs schemes may not always be negative for the economy when there
is some rent-seeking involved. Perhaps policy-makers can strike longer lasting rent-seeking
arrangements with zone investors that offer higher returns over all that one-off deals for
building bridges. In principle, such as scheme could benefit the people of the country more
than having no SEZ at all. Just like officials may distribute rights like exports quotas to firms
in exchange for rents (Krueger, 1974), they can continuously maintain SEZ status to
businesses in exchange for bribes or favors. SEZ permits must then be attractive enough to be
of value to businesses, so the zones must be more than clusters of poor infrastructure.

It is therefore quite plausible that SEZs can attract business while still being very corrupt.
Firms benefit from investing in a zone as long as the rents they must pay to government
officials are lower than their gains from SEZ status. They may consider the under-the-table
payments just another tax of doing business. This can create flourishing business
communities, as long as the rent-seeking does not dissipate all their extra profits from being
an SEZ firm. Many international firms may shun investing in a corrupt environment, but
domestic firms are more likely to endure the corrupt climate due to the lack of better domestic

12
alternatives and a higher cost of venturing abroad. They will however leave as well if the rents
that they must pay rise to dissipate their benefits from investing in a zone.

To avoid extracting too much rent from SEZ businesses, the SEZ planners need to make a
credible long-term commitment to companies. However, such a commitment is only viable if
they can promise that both their own and future government administrations will adhere to it
(Haber, 2002: xv). Any rent-seeking arrangement like this is therefore highly unstable in the
longer run.

Even if SEZ planners could introduce stable rent-seeking schemes, with SEZs that look
successful by virtue of attracting investments, these are likely to drain the economy as a
whole. The policy will therefore not be robust in the political economy sense of aligning self-
interests with economic progress. Single factory SEZs, where a firm can choose its location,
illustrate the point. Governments can grant “zone status” to single firms regardless of their
location. They can exchange tax-funded benefits in exchange for rents in the form of bribes
and favors that go straight into the officials‟ pockets. While the arrangement may be uphel for
a long time, the scheme does not benefit the economy and is therefore not robust.

The democratic solution

There are institutions with potential to actually solve the incentive problem. In a functioning
democratic and transparent system, public officials often gain personally from growth
promoting SEZ schemes. They politicians enjoy public support and thus electoral votes if they
can take credit for good SEZ policies. If the link between politics and economic outcomes is
clear, they have a stake in designing growth promoting zone schemes. Political and fiscal
decentralization both link a politician‟s policy judgments more directly to his chance of
reelection.

Democracy and decentralization in combination also give local officials the incentive to make
sure that their bureaucracies do not engage in low-level corruption. In contrast to a central
government, they are better able to understand what incentive scheme can work for their
agencies to create a clean bureaucracy. This logic also holds for any system that rewards low-
level officials for good SEZ performance, even in a non-democratic context.

13
Private SEZs

Private zone development, previously found to be a solution to the knowledge problem, can
also be a solution to problems stemming from adverse incentives. The model aligns incentives
of private developers trying to maximize their profits with providing the best business climate
possible at the lowest cost. They therefore tie economic progress in a zone very directly with
the rewards to its developers. Private zones are also less likely to end up as vehicles for rent-
seeking. When government officials are not providing the infrastructure and other
conveniences to SEZ firms, corrupt officials have fewer opportunities to extract rents from
companies.

Private companies also have very different incentives from government officials when it
comes to making the SEZs more attractive for companies. While governments compete for
businesses by adjusting taxes, tariffs and subsidies, private developers are generally unable to
change such policies. They must instead compete for investments by creating a more
attractive business climate (FIAS, 2008: 21). Just as producers of goods attract different kinds
of consumers when competing with quality rather than price (Hirschman, 1970: 47), private
SEZs attract fewer firms that are mere bargain hunters for tax breaks or that rely on cheap
labor for their production, and more technology intensive businesses. Private zones are
therefore more likely to generate longer-term investments as well as countrywide technology
transfers. Studies also show that private zones have an overall better record than public zones
on environmental and social indicators (FIAS, 2008: 21, 46).

4 Two contrasting SEZ schemes

The experiences with SEZs in India and China illustrate many of the points made in this
paper. While no SEZ case is black or white, I will use the Indian SEZ scheme to show in what
ways SEZs may not be robust. China on the other hand, seems to have broadly overcome
these problems.

The Indian case

India introduced their first SEZ in 1965 and by 2000, the country had still only established
seven small zones (Gopalakrishnan 2011: 139). India introduced a new SEZ Act in 2005,
offering more attractive business incentives (Kahn 2008: 69). Modeled on the Chinese SEZ
program, the goal is to development larger scale zones (Palit, Bhattacharjee, 2008: 88;
Seshadri 2011: 28). Overall, the impact of the Indian zone scheme on the economy is deemed

14
to have been small (Engman et al. 2007: 18). The exports from the Indian zones always been
just a fraction of the country‟s total (Seshadri, Storr, 2010: 348). Still, by the end of 2010,
India had approved as many as 580 SEZs, of which 367 have been notified but only 112 were
exporting (Dep. Of Commerce 2013)3.

Let us start with India‟s possible knowledge problems, which Seshadri and Storr (2010) argue
has been the key challenge to success for India‟s export processing zones. The Indian
governmental authorities have often determined both zone location and the nature of zone
production. Because they often chose poor, backward and unattractive zone locations, the
policy was poorly matched with market conditions. In addition, SEZ regulations frequently
posed obstacles for businesses in the zones to subcontract with firms outside the zones.
Therefore, the most successful zones were already high performing before becoming SEZs
(Seshadri, Storr, 2010: 363). To gather the necessary information to design the zones, the
Indian government often employed think-tanks to do the analysis. Palit and Bhattacharjee
(2008: 182) argue that the government needs to conduct more research to gather more
information to make these decisions.

A solution to the knowledge problem would however rather rely on decentralization of

decision-making. Prior to 2005, the Indian zone authority was a government department
office, without any autonomy over SEZ approval clearances and zone development
(Aggarwal, 2005: 16). With the 2005 SEZ Act, the Indian government gave greater discretion
to both State and Central government to regulate zones “as they see fit” (Burman, 2006: 5).
Yet Harding (2011: 163) points out that the government still has broad powers to direct
resources to the new SEZs. The government has allegedly also designated 60% of the new
zones are by as technology zones (Id.: 166). Sri Lanka and Bangladesh offer a comparison.
They both had more decentralized SEZ governance, with SEZ authorities with more
autonomy, and their SEZ schemes seem to have outperformed those in India (Aggarwal,
2005: 16, 42-44).

India also has problems with adverse incentives in their government bureaucracy. Low-level
corruptions is widely spread (TI, 2011: 12), and the SEZ scheme offers officials many
opportunities to extract rents. Aggarwal (2005) finds that prior to 1991, the Indian Board of
Approval granted companies SEZ status, after which additional permission must be sought
from the Secretariat of Industrial Approvals, the Ministry of Commerce, as well as from state

3
http://commerce.nic.in/pressrelease/pressrelease_detail.asp?id=2704

15
and central government departments. The only rationale behind the arduous process seems to
be the protection of rent-seeking opportunities. As of 2005, most companies had to go through
15 authorities to enter an Indian zone. In a survey, over 60% of SEZ firms reported frequently
paying “irregular payments”, both to custom clearance and zone authorities (Id: 26). Since
2005, a “single-window” policy has allegedly simplified the registration process. The 2005
law is however complicated and unclear, so the process may still be opaque and complicated
(Harding, 2011: 164).

The Chinese case

If India is a case study of a country with both knowledge and incentive problems, China
seems to show that they can also find their solutions. China introduced its SEZs as a part of
their economic reforms in the end of the 1970s. While the zones initially looked like a big
failure, they now host a significant share of the country‟s economic activities, and have been
described as the engines of China‟s regional economy (Fu, Gao, 2007: 22-23). Policies
initially introduced in the zones have subsequently spread to other Chinese regions. While not
all of China‟s SEZs have prospered, the scheme is generally considered a success.

China‟s decentralized system of governance has been important for China‟s general economic
success (Xu, 2011; Li, Li, Zhang, 2000: 283), but it was likely also the most important factor
in making China‟s SEZ scheme robust. Xu (2011) describes the Chinese system as a
“regionally decentralized authoritarian regime”. While the central government appoints and
promotes local officials, policymaking is extensively delegated to the lower levels of
bureaucracy. Political decentralization has allowed the Chinese SEZ program to be both
innovative and to created clear property rights among local governments, which allowed them
to act “as a conglomerate or as a holding company” (Li, Li, Zhang, 2000: 283). Some Chinese
zones were granted more autonomy than others. The SEZ in Shanghai could implement its
own regulations, allowing the Shanghai stock exchange to emerge as a self-regulated regional
market, supervised by the municipal government (Xu, 2011).

The Shenzhen zone, near Hong Kong, illustrates the benefit of limiting official zone planning.
Although initial guidelines for the Shenzhen zone stipulated that foreign direct investors had
to be high-technology firms, the government later simplified the provision to “some
technology”. This allowed the SEZ to grow on the back of its comparative advantages, in
particular the abundance of cheap labor. Deregulations allowed for the appropriate linkages to

16
the domestic market, making the Shenzhen SEZ a successful project (Farole, Akinci, 2011:
222).

China is also an example of how decentralization can allow SEZs to become test-beds for new
policies. The Chinese zones were confined areas where liberalizing reforms could be tried out
on a small scale (Cling, Letilly, 2001; Li, Li, Zhang, 2000). Their success demonstrated the
benefits of liberalization to pivotal figures in the Communist Party, who then allowed the SEZ
scheme to be implemented more widely (Crane, 1990: 91-98; Xu, 2011).

Despite its non-democratic political institutions, China also overcame the incentive problem.
The Chinese system of power granted positions and salaries to local leaders based on the
economic progress of their area. With their promotion and employment on the line, local
leaders had the incentive not to retard local progress (Xu, 2011). In their competition with
other Chinese regions, provincial leaders were encouraged to outperform each other in
economic performance. Many therefore embarked on policies like privatization of state-
owned enterprises that yielded high economic returns (Li, Li, Zhang, 2000).

5 Final remarks
This paper is a first robust political economy analysis on special economic zones (SEZs). The
goal has been to show that the underlying growth promoting potentials of an SEZ model
become clearer when examining the institutions that channel information and incentives of
officials and businesses.

The framework in this paper can be applied to other development policies to understand the
underlying causes of their success or failure to promote prosperity. Further research on SEZs
should also include case studies applying the robust political economy framework. While this
theoretical overview necessarily has been brief in its empirical applications, the approach may
show its strength when applied in more detailed policy analyses.

Further research on SEZ will surely reveal deficiencies in the rough criteria for robust policies
suggested here. For instance, Weingast et al. (1995: 55) emphasize the durability of the
Chinese decentralized system of governance. Mechanisms for sustainability may also be a
necessary condition to prevent governments from centralizing a well functioning and
decentralized SEZ scheme. Those who claim that corruption is a market enhancing institution
(Jeff, 1964; Lui, 1985; Beck, Maher, 1986) may object to the notion of robustness by claiming

17
that SEZs with corrupt foundations should be better than no SEZs. On the other hand, SEZs
may prove to be potent tools for policing corruption (Wei, 1999).

I have suggested that a robust political economy framework helps clarifying what needs to
change for an SEZ program to work. Both the knowledge and incentive problems must be
solved for SEZs to promote economic progress and avoid possibly becoming vehicles for
corruption. There is evidently more than one solution. Private zone development allows the
decision making about zone investments to lie with the people with market knowledge. It also
limits the magnitude of rent-seeking opportunities. Private development can thus avoid both
the knowledge problem and the incentive problem. Limited zone planning and
decentralization can alleviate the knowledge problem but also risks aggravating the problem
with low-level corruption. It therefore needs to be combined with either democratic
accountability or a Chinese style top-down reward system to address the incentive problem.
Depending on the institutional context, countries can tread very different paths to make their
SEZs robust.

Acknowledgements: I would like to thank Tyler Cowen, Christopher J. Coyne and Vlad
Tarko, at George Mason Department of Economics, for invaluable insights and suggestions.

18
References
Aggarwal, Aradhna, 2005. Performance of Export Processing Zones: A Comparative Analysis
of India, Sri Lanka, and Bangladesh, Indian Council for Research on International Economic
Relations (ICRIER) Working Paper No. 155. Available at http://icrier.org/pdf/wp155.pdf
(accessed 15 Dec. 2012).

Aggarwal, Aradhna, 2006. Special Economic Zones: Revisiting the Policy Debate. Economic
and Political Weekly, 41(43/44), pp. 4533-4536.

Aggarwal, Aradhna, 2007. Impact of Special Economic Zones on Employment, Poverty, and
Human Development. Indian Council for Research on International Economic Relations
Working Paper No. 194. Available at http://www.democraciaycooperacion.net/IMG/pdf/1-
working_paper_194.pdf (accessed 15 Dec. 2012).

Auty, Richard, 2011. “Early Reform Zones: Catalysts for Dynamic Market Economies in
Africa, Ch. 9 in: Special Economic Zones: Progress, Emerging Challenges, and Future
Directions. (Thomas Farole and Gokhan Akinci eds.), 2011. Washington, D.C.: The World
Bank.

Beaulier, Scott A. and J. Robert Subrick, 2006. Poverty traps and the robust political economy
of development assistance, Review of Austrian Economics, 19, pp. 217–226.

Beck, P., and M. W. Maher, 1986, A Comparison of Bribery and Bidding in Thin Markets,
Economic Letters, 20, pp. 1–5.

Becker, Gary S., 1974. Crime and Punishment: An Economic Approach. In: Becker, Gary S.
and William M. Landes (eds.). Essays in the Economics of Crime and Punishment. UMI, pp.
1-54.

Boettke, Peter J. and Peter T. Leeson, 2004. Liberalism, Socialism, and Robust Political
Economy, Journal of Markets & Morality, 7(1), pp. 99–111.

Brennan, Geoffrey and James M. Buchanan, 1980. The Power to Tax. New York: Cambridge
University Press.

Burman, Anirudh, 2006. Special Economic Zones: Issues in Corporate Governance. Available
at SSRN: http://ssrn.com/abstract=954934 (accessed 15 Dec. 2012).

19
Carter, Connie and Andrew Harding (eds.), 2011. Special Economic Zones in Asian Market
Economies. New York and London: Routledge.

Cling, Jean-Pierre and Gaëlle Letilly, 2001. Export Processing Zones: A Threatened
Instrument for Global Economy Insertion? DIAL Working paper DT/2001/17. Available at
http://ideas.repec.org/p/dia/wpaper/dt200117.html (accessed 15 Dec. 2012).

Costachie, Silviu, 2008. Free Zones, Some Theoretical Aspects. Annals of the University of
Craivora: Series Geography, 11, pp. 138 – 146.

Crane, George T., 1990. The political Economy of China’s Special Economic Zones. Armonk,
New York and London, England: M. E. Sharpe Inc.

Crane, George T., 1994. „Special Things in Special Ways': National Economic Identity and
China's Special Economic Zones. The Australian Journal of Chinese Affairs, 32, pp. 71-92.

Davies, H. and P.D. Ellis, 2000. Porter‟s „Competitive Advantage of Nations‟: Time for a
final judgment? Journal of Management Studies, 37(8), pp. 1189-1213.

Desrochers, Pierre and Frédéric Sautet 2004. Cluster-Based Economic Strategy, Facilitation
Policy and the Market Process. The Review of Austrian Economics, 17(2/3) pp. 233–245.

Easterly, William, 2002. The Elusive Quest for Growth: Economists' Adventures and
Misadventures in the Tropics. Cambridge, MA and London, England: The MIT Press.

Easterly, William, 2006. The White Man’s Burden: Why the West's Efforts to Aid the Rest
Have Done so Much Ill and so Little Good. New York: Penguin Books.

Engman, Michael, 2011. Success and Stasis in Honduras‟ Free Zones. In: Farole, Thomas and
Gokhan Akinci (eds.), 2011. Special Economic Zones: Progress, Emerging Challenges, and
Future Directions. Washington, D.C.: The World Bank.

Engman, Michael, Osamu Onodera and Enrico Pinali, 2007. Export Processing Zones: Past
And Future Role In Trade And Development. OECD Trade Policy Working Paper, No. 53,
OECD Trade Directorate.

Eusepi, Giuseppe and Richard E. Wagner, 2011. States as Ecologies of Political Enterprises.
Review of Political Economy, 23(4), pp. 573-585.

20
The Freeport Area of Bataan (FAB), homepage link “FAB History”, available at
http://www.freeportareaofbataan.com/fab/index.php?option=com_content&view=article&id=
64&Itemid=154 (accessed Oct. 12, 2013).

Farole, Thomas 2011a. Special Economic Zones What Have We Learned. The World Bank:
Economic Premise, No. 64.

Farole, Thomas, 2011b. Special Economic Zones in Africa: Comparing Performance and
Learning from Global Experience. Washington, D.C.: The World Bank.

Farole, Thomas and Gokhan Akinci (eds.), 2011. Special Economic Zones: Progress,
Emerging Challenges, and Future Directions. Washington, D.C.: The World Bank.

Farole, Thomas and Josaphat Kweka, 2011. Institutional Best Practices for Special Economic
Zones: An Application to Tanzania, Afica Trade Policy Note No: 25, The World Bank.
Available at: http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/AFRICAEXT/
EXTAFRREGTOPTRADE/0,,contentMDK:22987846~pagePK:34004173~piPK:34003707~t
heSitePK:502469~isCURL:Y,00.html (accessed 21 Jul. 2013).

FIAS, 2008. Special Economic Zones Performance, Lessons Learned, and Implications for
Zone Development. Washington, D.C.: The World Bank Group.

Frye, Timothy and Andrei Shleifer, 1997. The Invisible Hand and the Grabbing Hand. The
American Economic Review, 87(2), Papers and Proceedings of the Hundred and Fourth
Annual Meeting of the American Economic Association, pp.354-358.

Gopalakrishnan, Shankar, 2011. SEZs in India: An economic policy or a political

intervention? Ch. 8 in: Special Economic Zones in Asian Market Economies (Connie Carter
and Andrew Harding eds.), New York and London: Routledge.

Guangwen, Meng, 2003. The Theory and Practice of Free Economic Zones: A Case Study of
Tianjin, People’s Republic of China. Peter Lang Pub. Inc. Available at http://archiv.ub.uni-
heidelberg.de/volltextserver/3244/1/fez-meng.pdf (accessed 15 Dec. 2012).

Haber, Stephen, 2002. Crony Capitalism and Economic Growth in Latin America: Theory
and Evidence. Hoover Institution Press.

Hamada, Koichi, 1974. An Economic Analysis of Duty-free Zone. Journal of International

Economics, 4, pp. 225-241.

21
Harding, Andrew, 2011. The Indian Special Economic Zones Act 2005: Implications for
modeling the law and governance of SEZs, Ch. 9 in: Special Economic Zones in Asian Market
Economies (Connie Carter and Andrew Harding eds.), New York and London: Routledge.

Harrison, Bennett, 1992. Industrial Districts: Old Wine in New Bottles? Regional Studies,
26(5), pp. 469-483.

Hayek, F. A., [1960] 2011. The Constitution of Liberty. London, Chicago: University of
Chicago Press.

Hayek, F. A., 1945. The Use of Knowledge in Society. The American Economic Review,
35(4), pp. 519-530.

Hirschman, Albert O., 1970. Exit, voice, and loyalty: Responses to Decline in Firms,
Organizations, and States. Cambridge, MA: Harvard University Press.

Holcombe, Randall, 2002. Political Entrepreneurship and the Democratic Allocation of

Economic Resources. The Review of Austrian Economics, 15(2/3), pp. 143–159.

Ikeda, Sanford, 2005. The Dynamics of Interventionism. In: Kurrild-Klitgaard, P., ed. 2005.
Advances in Austrian Economics, Vol. 8: The Dynamics of Interventionism: Regulation and
Redistribution in the Mixed Economy, pp. 21-58.

ILO, Jean-Pierre Singa Boyenge. Database on export processing zones (Revised), 2007.,
Working Paper 251, Geneva, Switzerland: International Labour Office.

Jayanthakumaran, Kankesu, 2003. Benefit–cost Appraisals of Export Processing Zones: A

Survey of the Literature. Development Policy Review, 21(1), pp. 51-65.

Kirzner, Israel M., 1985 [1979]. The Perils of Regulation: A Market-Process Approach. In:
Discovery and the Capitalist Process. Chicago: University of Chicago Press, pp. 119-149.

Krueger, Anne O. 1993. Political Economy of Policy Reform in Developing Countries, MIT
Press.

Leff, N. 1964, Economic Development through Bureaucratic Corruption, American

Behavioral Scientist, 8(3), pp. 8–14.

Lui, F. T. 1985, An Equilibrium Queuing Model of Bribery, Journal of Political Economy,

93, pp. 760–81.

22
Lavoie, Don, 1985. National Economic Planning: What is Left? Cambridge MA, USA:
Ballinger Publishing Company.

Li, Shaomin, Shuhe Li and Weiying Zhang, 2000. The Road to Capitalism: Competition and
Institutional Change in China. Journal of Comparative Economics, 28, pp. 269–292.

Madani, Dorsati, 1999. A Review of the Role and Impact of Export Processing Zones. The
World Bank: Working Paper, No. 2238.

Martin, Ron and Peter Sunley, 2001. Deconstructing Clusters: Chaotic Concept or Policy
Panacea? Journal of Economic Geography, 3(1), pp. 5-35.

McGuire, Martin C., and Mancur L. Olson Jr, 1996. The Economics of Autocracy and
Majority Rule: The Invisible Hand and the Use of Force, Journal of Economic Literature, 34,
pp. 72–96.

Miller, R. and Côté, M., 1985. Growing the Next Silicon Valley. Harvard Business Review,
Jul./Aug., pp. 114–123.

Mises, Ludwig von, [1949]2010. Human Action: The Scholar's Edition. Auburn, Alabama:
Ludwig von Mises Institute.

Mises, Ludwig von, 1977. A Critique of Interventionism, USA: Arlington House Publishers.

Morriss, Andrew P. and Moberg, Lotta, 2012. Cartelizing Taxes: Understanding the OECD‟s
Campaign Against 'Harmful Tax Competition', Columbia Journal of Tax Law, 4(1), pp. 1-64.

Niskanen, William A., 1971. Bureaucracy and Representative Government. Chicago, New
York: Aldine Atherton.

Palit, Amitendu and Subhomoy Bhattacharjee, 2008. Special Economic Zones in India: Myths
and Realities, Anthem Press.

Pennington, Mark, 2011. Robust Political Economy: Classical Liberalism and the Future of
Public Policy, Cheltenham, UK and Northampton,, MA, USA: Edward Elgar.

Porter, Michael E., 1998. Clusters and the New Economics of Competition. Harvard Business
Review, reprint 98609.

23
Porter, Michael E., 2000. Location, Competition, and Economic Development: Local Clusters
in a Global Economy. Economic Development Quarterly 2000; 14(1), pp. 15-34.

Pradeep, Nema and Pokhariyal Pradeep, 2008. SEZs as Growth Engines – India Vs China.
Available at: http://ssrn.com/abstract=1279023 (accessed 16 Dec. 2012).

Prihodko, S., N. Volovik, A. Hecht, B. Sharpe and M. Mandres, 2007. Special Economic
Zones. Consortium for Economic Policy Research and Advice, Moscow. Available at
http://ssrn.com/abstract=2160783 (accessed 15 Dec. 2012).

Reder, Melvin W., 1982. Chicago Economics: Permanence and Change. Journal of Economic
Literature, 20(1), pp. 1-38.

Rosenstein-Rodan, P. N., 1943. Problems of Industrialisation of Eastern and South-Eastern

Europe. The Economic Journal, 53(210/211), pp. 202-211.

Seshadri , Triyakshana and Virgil Henry Storr, 2010. Knowledge problems associated with
creating export zones, The Review of Austrian Economics, 23(4), pp. 347-366.

Shleifer, Andrei and Robert Vishny,1993. Corruption. The Quarterly Journal of Economics,
108(3), pp. 599-617.

Sit, Victor S. F., 1985. The Special Economic Zones of China: A New Type of Export
Processing Zone? The Developing Economies, 23(1), pp. 69-87.

Strong, Michael and Robert Himber, 2009. The Legal Autonomy of the Dubai International
Financial Centre: A Scalable Strategy for Global Free-Market Reforms. Economic Affairs,
29(2), pp. 36-41.

TI – Transparency International, 2011. Daily Lives and Corruption: Public Opinion in South
Asia. Available at
http://www.transparency.org/whatwedo/pub/daily_lives_and_corruption_public_opinion
_in_south_asia (accessed 20 Jul. 2013).

Tullock, Gordon, 1987. The Politics of Bureaucracy. Lanham, New York, London: Public
Affairs Press.

Tuominen, Karita and Eero Lamminen, 2008. Russian Special Economic Zones, Electronic
Publications of Pan-European Institute 18/2008, ISSN 1795-5076. Available at

24
http://www.balticseaweb.com/files/files/publications/pan/2008/Tuominen%20and%20Lammi
nen%201808%20web.pdf (accessed 15 Dec. 2012).

Wallis, John Joseph, 2006. ”The Concept of Systematic Corruption in American History,” in:
Corruption and Reform: Lessons from America's Economic History (Edward L. Glaeser and
Claudia Goldin eds.), University of Chicago Press.

Warr, Peter G., 1987. Export Promotion via Industrial Enclaves: The Philippines‟ Bataan
Export Processing Zone. The Journal of Development Studies, 23(2), pp. 220-241.

Warr, Peter G., 1989. Export Processing Zones: The Economics of Enclave Manufacturing.
The World Bank: Research Observer, 4(1), pp. 65-88.

Wei, Shang-Jin. Special Governance Zone: A Practical Entry-Point for a Winnable Anti-
Corruption Program. 9th International Anti-Corruption Conference, Durban, South Africa, 10-
15 December, 1999. Available at: http://9iacc.org/papers/day2/ws1/dnld/d2ws1_sjwei.pdf
(accessed 21 Jul. 2013).

WB – The World Bank, 1992. Export Processing Zones, Policy and Research Series, 20,
Washington, D.C.: The World Bank.

Xu, Chenggang, 2011. The Fundamental Institutions of China‟s Reforms and Development.
Journal of Economic Literature, 49(4), pp. 1076–1151.

Yuan, Jing-dong and Lorraine Eden, 1992. Export Processing Zones in Asia: A Comparative
Study. Asian Survey, 32(11), pp. 1026-1045.

25