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Special Economic Zones in Developing and/or Transition Economies: a Policy Proposal

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  • Albert G. Schweinberger

Abstract

Making use of a global partitioning (disintegration) approach, a novel necessary and sufficient condition for the creation of Pareto‐improving special economic zones is derived. It is shown that the establishment of a special economic zone may be desirable even if foreign investment has an immiserization effect. The present approach allows not only for the use of mobile but also immobile domestically owned factors in the special economic zone. Adopting a political economy perspective, multihousehold economies with and without the feasibility of lump‐sum compensation are modeled. It is shown that, subject to a certain condition, the setting up of special economic zones accompanied by appropriate tax policies results in an increase in government revenue. The latter may be used to finance much‐needed investment in infrastructure or the production of public goods.

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  • Albert G. Schweinberger, 2003. "Special Economic Zones in Developing and/or Transition Economies: a Policy Proposal," Review of International Economics, Wiley Blackwell, vol. 11(4), pages 619-629, September.
    • Handle: RePEc:bla:reviec:v:11:y:2003:i:4:p:619-629
    DOI: 10.1111/1467-9396.00407
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    Cited by:

    1. Sina Hardaker, 2020. "Embedded Enclaves? Initial Implications of Development of Special Economic Zones in Myanmar," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 32(2), pages 404-430, April.
    2. Anwar Mohammad Amir, 2014. "New modes of industrial manufacturing: India’s experience with special economic zones," Bulletin of Geography. Socio-economic Series, Sciendo, vol. 24(24), pages 1-19, June.
    3. Ronald B. Davies & Arman Mazhikeyev, 2019. "The Impact of Special Economic Zones on Exporting Behavior," Review of Economic Analysis, Digital Initiatives at the University of Waterloo Library, vol. 11(1), pages 145-174, July.
    4. Konstantinos J. Hazakis, 2014. "The rationale of special economic zones (SEZs): An Institutional approach," Regional Science Policy & Practice, Wiley Blackwell, vol. 6(1), pages 85-101, March.
    5. Chaudhuri, Sarbajit & Yabuuchi, Shigemi, 2010. "Formation of special economic zone, liberalized FDI policy and agricultural productivity," International Review of Economics & Finance, Elsevier, vol. 19(4), pages 779-788, October.

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