Special Economic Zones: Boon or bane for emerging country firms?
To enable firms to participate in the globalization process, governments in emerging economies may opt to implement policies aimed at increasing their countries’ attractiveness to foreign investors. One frequently used industrial policy measure in many emerging economies is the establishment of so-called Special Economic Zones (SEZs). These are geographically delineated areas within which governments promote industrial activity through infrastructure investment and fiscal and special regulatory incentives with the aim of attracting investments. There are currently an estimated 4,300 SEZs worldwide which account for at least 20 per cent of global trade.