SEZ – Asian Experience
Case Study
Conceptual Framework for SEZs and the experience of Asian countries
This study presents a comprehensive and integrated conceptual framework to explain the divergent experiences of SEZ countries in Asia. It distinguishes between the formal and informal institutions and argues that SEZs are a safety valve between these institutions in a given macroeconomic context. They can serve as a multi-dimensional policy tool. There is thus no universal set of critical success factors or development outcomes of SEZs. Much depends on the strategic approach underlying the SEZ policy. Policy markers implementing the SEZ policy must have a clear understanding of these approaches and the underlying mechanisms through which SEZs can achieve the desired goals. A potentially successful strategy is conditional upon the macro conditions, broader growth strategy, development goals and institutional challenges facing the country. A review of the SEZ experience of 11 selected Asian countries shows that a strong focus on the competitiveness of domestic firms and continuous strengthening of their capacity together with upgrading of SEZs are pre-requisites to achieve phenomenal industrial transformation using the SEZ strategy. The project was funded by the Asian Development Bank.
Ongoing
SEZs and Industrial Park Development in Central Asia
The landlocked Central Asian countries began developing special economic zones in the early 1990s. However, they failed in generating substantial gains through zones, and eventually, many of them scrapped them. Economic realities changed in these countries over the last decade. Creation of the Eurasian Economic Union, WTO agreements, the upcoming multimodal corridor network across the region, and the proposed silk road strategy have all contributed to facilitating trade and growth in this formidable region. To leverage these trade drivers and notwithstanding the earlier experience, these countries have introduced the ‘New’ Special Economic Zone regimes in recent years. A critical question that faces them is : What type of SEZs and SEZ policies are most likely to succeed in these countries? This project, sponsored by the Asian Development Bank, aims at addressing this question. While focusing on Kazakhstan and the Kyrgyz Republic, it proposes to identify the factors that are crucial for the success of SEZs in Central Asia keeping in view the physical, political and economic contexts of the region, and develop strategic frameworks for developing successful special economic zones and industrial parks in the selected countries. The two countries are different in terms of the level of development, income per capita, factor endowment, and human capital. The study will therefore have important implications for developing SEZs in landlocked countries with different economic potential.
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