[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/a/unc/tncjou/1.html
   My bibliography  Save this article

Using special economic zones to facilitate development: policy implications

Author

Listed:
  • Rajneesh Narula
  • James X. Zhan
Abstract
Volume 26 number 2 of the Transnational Corporations journal is a special issuededicated to special economic zones (SEZs) and their potential as vehicles for development. The issue grew out of research and background papers that fed into UNCTAD’s World Investment Report 2019, the thematic focus of which was SEZs. In compiling this issue, we sought to contextualize the emergence of SEZs, their evolution, and the associated policy trajectories that underpin them. This introductory paper amalgamates observations from the broader academic literature, as well as the findings of the World Investment Report 2019 and its associated background papers. A common theme is that a well-designed zone will evolve with the changing comparative advantages and development level of the underlying economy, in what is described as the “SEZ development ladder”. As the locational advantages change, the emphasis and the objectives of the SEZ must also change. Reliance on “generic” locational advantages must necessarily diminish, and greater emphasis needs to be placed on developing “specialized” locational advantages. Another key finding is that the benefits of an SEZ must intentionally “leak” beyond the perimeter of the zone. The pervasiveness of the direct, indirect, and induced extra-SEZ effects beyond the geographically bounded space of the SEZ determines its success or failure. Scope remains for future research on SEZs, focusing on their sustainability, the impact of the digital economy and industry 4.0, and the involvement of new financing partners for SEZ development.

Suggested Citation

  • Rajneesh Narula & James X. Zhan, . "Using special economic zones to facilitate development: policy implications," UNCTAD Transnational Corporations Journal, United Nations Conference on Trade and Development.
    • Handle: RePEc:unc:tncjou:1
    as

    Download full text from publisher

    File URL: https://unctad.org/system/files/official-document/diaeia2019d2a1_en.pdf?repec
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Narula, Rajneesh & Van der Straaten, Khadija, 2019. "A comment on the multifaceted relationship between multinational enterprises and within-country inequality," MERIT Working Papers 2019-035, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    2. Rajneesh Narula & André Pineli, 2019. "Improving the developmental impact of multinational enterprises: policy and research challenges," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 46(1), pages 1-24, March.
    3. Aradhna Aggarwal, . "SEZs and economic transformation:towards a developmental approach," UNCTAD Transnational Corporations Journal, United Nations Conference on Trade and Development.
    4. Head, Keith & Ries, John & Swenson, Deborah, 1995. "Agglomeration benefits and location choice: Evidence from Japanese manufacturing investments in the United States," Journal of International Economics, Elsevier, vol. 38(3-4), pages 223-247, May.
    5. Xiangming Chen, . "Change and continuity in special economic zones: a reassessment and lessons from China," UNCTAD Transnational Corporations Journal, United Nations Conference on Trade and Development.
    6. -, 2014. "Foreign Direct Investment in Latin America and the Caribbean 2013," La Inversión Extranjera Directa en América Latina y el Caribe, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 36861 edited by Eclac, May.
    7. Rafael La Porta & Andrei Shleifer, 2008. "The Unofficial Economy and Economic Development," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 39(2 (Fall)), pages 275-363.
    8. Lall, Sanjaya, 1980. "Vertical Inter-Firm Linkages in LDCs: An Empirical Study," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 42(3), pages 203-226, August.
    9. Rajneesh Narula & John Dunning, 2010. "Multinational Enterprises, Development and Globalization: Some Clarifications and a Research Agenda," Oxford Development Studies, Taylor & Francis Journals, vol. 38(3), pages 263-287.
    10. Narula, Rajneesh & Marin, Anabel, 2003. "FDI spillovers, absorptive capacities and human capital development: evidence from Argentina," Research Memorandum 018, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
    11. Narula, Rajneesh, 2018. "Multinational firms and the extractive sectors in the 21st century: Can they drive development?," Journal of World Business, Elsevier, vol. 53(1), pages 85-91.
    12. Jeong , Hyung-Gon & Zeng , Douglas Zhihua, 2016. "Promoting Dynamic & Innovative Growth in Asia: The Cases of Special Economic Zones and Business Hubs," Policy Analyses 16-1, Korea Institute for International Economic Policy.
    13. Lorentzen, Jochen, 2005. "The absorptive capacities of South African automotive component suppliers," World Development, Elsevier, vol. 33(7), pages 1153-1182, July.
    14. Page, John & Tarp, Finn (ed.), 2017. "The Practice of Industrial Policy: Government-Business Coordination in Africa and East Asia," OUP Catalogue, Oxford University Press, number 9780198796954.
    15. Paola Criscuolo & Rajneesh Narula, 2008. "A novel approach to national technological accumulation and absorptive capacity: aggregating Cohen and Levinthal," The European Journal of Development Research, Taylor and Francis Journals, vol. 20(1), pages 56-73.
    16. Gary Gereffi & Joonkoo Lee, 2016. "Economic and Social Upgrading in Global Value Chains and Industrial Clusters: Why Governance Matters," Journal of Business Ethics, Springer, vol. 133(1), pages 25-38, January.
    17. Johansson, Helena & Nilsson, Lars, 1997. "Export processing zones as catalysts," World Development, Elsevier, vol. 25(12), pages 2115-2128, December.
    18. Giuliani, Elisa & Pietrobelli, Carlo & Rabellotti, Roberta, 2005. "Upgrading in Global Value Chains: Lessons from Latin American Clusters," World Development, Elsevier, vol. 33(4), pages 549-573, April.
    19. Yeseul Hyun & Shree Ravi, 2018. "Place-based Development: Evidence from Special Economic Zones in India," Boston University - Department of Economics - The Institute for Economic Development Working Papers Series dp-306, Boston University - Department of Economics.
    20. Thomas Farole, 2011. "Special Economic Zones in Africa : Comparing Performance and Learning from Global Experience," World Bank Publications - Books, The World Bank Group, number 2268.
    21. Rajneesh Narula, 2019. "Enforcing higher labor standards within developing country value chains: Consequences for MNEs and informal actors in a dual economy," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(9), pages 1622-1635, December.
    22. Sanjaya Lall & Paul Streeten, 1977. "Foreign Investment, Transnationals and Developing Countries," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-02290-8, March.
    23. Rajneesh Narula & André Pineli, 2017. "Multinational Enterprises and Economic Development in Host Countries: What We Know and What We Don’t Know," Palgrave Studies in Impact Finance, in: Gianluigi Giorgioni (ed.), Development Finance, chapter 6, pages 147-188, Palgrave Macmillan.
    24. Moberg, Lotta, 2015. "The political economy of special economic zones," Journal of Institutional Economics, Cambridge University Press, vol. 11(1), pages 167-190, March.
    25. Beugelsdijk, Sjoerd & Pedersen, Torben & Petersen, Bent, 2009. "Is there a trend towards global value chain specialization? -- An examination of cross border sales of US foreign affiliates," Journal of International Management, Elsevier, vol. 15(2), pages 126-141, June.
    26. Sanjaya Lall, 1980. "Transnationals, Domestic Enterprises and Industrial Structure in Host LDCs: A Survey," Palgrave Macmillan Books, in: The Multinational Corporation, chapter 2, pages 29-64, Palgrave Macmillan.
    27. Alexey Kuznetsov & Olga Kuznetsova, . "The success and failure of Russian SEZs: some policy lessons," UNCTAD Transnational Corporations Journal, United Nations Conference on Trade and Development.
    28. Lall, Sanjaya & Narula, Rajneesh, 2004. "FDI and its role in economic development: Do we need a new agenda?," Research Memorandum 019, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
    29. Gerald A McDermott & Rafael A Corredoira, 2010. "Network composition, collaborative ties, and upgrading in emerging-market firms: Lessons from the Argentine autoparts sector," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 41(2), pages 308-329, February.
    30. Gabriel R. G. Benito & Rajneesh Narula (ed.), 2007. "Multinationals on the Periphery," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-59304-6, March.
    31. Kaplinsky, Raphael, 1993. "Export Processing Zones in the Dominican Republic: Transforming manufactures into commodities," World Development, Elsevier, vol. 21(11), pages 1851-1865, November.
    32. François Bost, . "Special economic zones: methodological issues and definition," UNCTAD Transnational Corporations Journal, United Nations Conference on Trade and Development.
    33. Kolk, Ans, 2016. "The social responsibility of international business: From ethics and the environment to CSR and sustainable development," Journal of World Business, Elsevier, vol. 51(1), pages 23-34.
    34. Oliver Morrissey, 2012. "FDI in Sub-Saharan Africa: Few Linkages, Fewer Spillovers," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 24(1), pages 26-31, February.
    35. Nigel Driffield & James H Love, 2007. "Linking FDI motivation and host economy productivity effects: conceptual and empirical analysis," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 38(3), pages 460-473, May.
    36. Susanne Frick & Andrés Rodríguez-Pose, . "Are special economic zones in emerging countries a catalyst for the growth of surrounding areas?," UNCTAD Transnational Corporations Journal, United Nations Conference on Trade and Development.
    37. Garrick Blalock & Daniel H Simon, 2009. "Do all firms benefit equally from downstream FDI? The moderating effect of local suppliers’ capabilities on productivity gains," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 40(7), pages 1095-1112, September.
    38. Thomas Farole & Gokhan Akinci, 2011. "Special Economic Zones : Progress, Emerging Challenges, and Future Directions," World Bank Publications - Books, The World Bank Group, number 2341.
    39. Jodi L. Short & Michael W. Toffel & Andrea R. Hugill, 2016. "Monitoring global supply chains," Strategic Management Journal, Wiley Blackwell, vol. 37(9), pages 1878-1897, September.
    40. Madani, Dorsati, 1999. "A review of the role and impact of export processing zones," Policy Research Working Paper Series 2238, The World Bank.
    41. Aradhna Aggarwal, 2011. "PROMOTING AGGLOMERATION ECONOMIES AND INDUSTRIAL CLUSTERING THROUGH SEZs: EVIDENCE FROM INDIA," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 2(02), pages 201-227.
    42. Guangwen Meng & Douglas Zhihua Zeng, . "Structural transformation through free trade zones: the case of Shanghai," UNCTAD Transnational Corporations Journal, United Nations Conference on Trade and Development.
    43. Alkon, Meir, 2018. "Do special economic zones induce developmental spillovers? Evidence from India’s states," World Development, Elsevier, vol. 107(C), pages 396-409.
    44. Xavier Cirera & Rajith W. D. Lakshman, 2017. "The impact of export processing zones on employment, wages and labour conditions in developing countries: systematic review," Journal of Development Effectiveness, Taylor & Francis Journals, vol. 9(3), pages 344-360, July.
    45. Andrew Schrank, 2001. "Export Processing Zones: Free Market Islands or Bridges to Structural Transformation?," Development Policy Review, Overseas Development Institute, vol. 19(2), pages 223-242, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Susanne A. Frick & Andrés Rodríguez-Pose, 2023. "What draws investment to special economic zones? Lessons from developing countries," Regional Studies, Taylor & Francis Journals, vol. 57(11), pages 2136-2147, November.
    2. Sumon Kumar Bhaumik & Saul Estrin & Rajneesh Narula, 2024. "Integrating host-country political heterogeneity into MNE–state bargaining: insights from international political economy," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 55(2), pages 157-171, March.
    3. Andrés Rodríguez‐Pose & Federico Bartalucci & Susanne A. Frick & Amelia U. Santos‐Paulino & Richard Bolwijn, 2022. "The challenge of developing special economic zones in Africa: Evidence and lessons learnt," Regional Science Policy & Practice, Wiley Blackwell, vol. 14(2), pages 456-481, April.
    4. Woodgate, Ryan, 2021. "Multinational corporations and commercialised states: Can state aid serve as the basis for an FDI-driven growth strategy?," IPE Working Papers 161/2021, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    5. Kleibert, Jana M. & Bobée, Alice & Rottleb, Tim & Schulze, Marc, 2021. "Transnational education zones: Towards an urban political economy of ‘education cities’," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 58(14), pages 2845-2862.
    6. Jana M Kleibert & Alice Bobée & Tim Rottleb & Marc Schulze, 2021. "Transnational education zones: Towards an urban political economy of ‘education cities’," Urban Studies, Urban Studies Journal Limited, vol. 58(14), pages 2845-2862, November.
    7. Saira Naeem & Abdul Waheed & Muhammad Naeem Khan, 2020. "Drivers and Barriers for Successful Special Economic Zones (SEZs): Case of SEZs under China Pakistan Economic Corridor," Sustainability, MDPI, vol. 12(11), pages 1-18, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rajneesh Narula & André Pineli, 2017. "Multinational Enterprises and Economic Development in Host Countries: What We Know and What We Don’t Know," Palgrave Studies in Impact Finance, in: Gianluigi Giorgioni (ed.), Development Finance, chapter 6, pages 147-188, Palgrave Macmillan.
    2. Rajneesh Narula & André Pineli, 2019. "Improving the developmental impact of multinational enterprises: policy and research challenges," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 46(1), pages 1-24, March.
    3. Narula, Rajneesh & Van der Straaten, Khadija, 2019. "A comment on the multifaceted relationship between multinational enterprises and within-country inequality," MERIT Working Papers 2019-035, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    4. Khadija Straaten & Niccolò Pisani & Ans Kolk, 2020. "Unraveling the MNE wage premium," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(9), pages 1355-1390, December.
    5. Andrés Rodríguez‐Pose & Federico Bartalucci & Susanne A. Frick & Amelia U. Santos‐Paulino & Richard Bolwijn, 2022. "The challenge of developing special economic zones in Africa: Evidence and lessons learnt," Regional Science Policy & Practice, Wiley Blackwell, vol. 14(2), pages 456-481, April.
    6. Heim, Irina & Kalyuzhnova, Yelena & Ghobadian, Abby, 2023. "Win-win strategies for firms operating in resource-abundant countries: Technological spillovers and a collaborative diversification policy," Resources Policy, Elsevier, vol. 83(C).
    7. Douglas Zhihua Zeng, 2022. "What Determines the Heterogeneous Performance of Special Economic Zones? Evidence from Sub‐Sahara Africa," Global Policy, London School of Economics and Political Science, vol. 13(4), pages 495-506, September.
    8. Richard Adu-Gyamfi & Simplice A. Asongu & Tinaye S. Mmusi & Herbert Wamalwa & Madei Mangori, 2020. "A comparative study of export processing zones in the wake of sustainable development goals: Cases of Botswana, Kenya, Tanzania and Zimbabwe," Research Africa Network Working Papers 20/025, Research Africa Network (RAN).
    9. Rajneesh Narula, 2019. "Enforcing higher labor standards within developing country value chains: Consequences for MNEs and informal actors in a dual economy," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(9), pages 1622-1635, December.
    10. Aradhna Aggarwal & Ari Kokko, 2021. "SEZs and poverty reduction: evidence from Andhra Pradesh, India," International Journal of Emerging Markets, Emerald Group Publishing Limited, vol. 17(8), pages 1793-1814, January.
    11. Jaideep Anand & Gerald McDermott & Ram Mudambi & Rajneesh Narula, 2021. "Innovation in and from emerging economies: New insights and lessons for international business research," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 52(4), pages 545-559, June.
    12. Pineli, Andre & Narula, Rajneesh & Belderbos, Rene, 2019. "FDI, multinationals and structural change in developing countries," MERIT Working Papers 2019-004, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    13. Jan Fagerberg & Bengt-Åke Lundvall & Martin Srholec, 2018. "Global Value Chains, National Innovation Systems and Economic Development," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 30(3), pages 533-556, July.
    14. Jonathan Fu & Annette Krauss, 2024. "Preparing fertile ground: how does the quality of business environments affect MSE growth?," Small Business Economics, Springer, vol. 63(1), pages 51-103, June.
    15. Saira Naeem & Abdul Waheed & Muhammad Naeem Khan, 2020. "Drivers and Barriers for Successful Special Economic Zones (SEZs): Case of SEZs under China Pakistan Economic Corridor," Sustainability, MDPI, vol. 12(11), pages 1-18, June.
    16. Rajneesh Narula, 2015. "The Importance of Domestic Capabilities for FDI-assisted Development: Lessons from Asia and Latin America," John H Dunning Centre for International Business Discussion Papers jhd-dp2015-05, Henley Business School, University of Reading.
    17. Khan, Karim, 2019. "Special Economic Zones (SEZs) and Prospects for the Domestic Economy of Pakistan," MPRA Paper 103337, University Library of Munich, Germany.
    18. Susanne A. Frick & Andrés Rodríguez-Pose, 2022. "Special Economic Zones and Sourcing Linkages with the Local Economy: Reality or Pipedream?," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 34(2), pages 655-676, April.
    19. Narula, Rajneesh & Portelli, Brian, 2004. "Foreign direct investment and economic development: Opportunities and limitations from a developing country perspective," Research Memorandum 009, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
    20. Klaus E Meyer & Evis Sinani, 2009. "When and where does foreign direct investment generate positive spillovers? A meta-analysis," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 40(7), pages 1075-1094, September.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:unc:tncjou:1. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kumi Endo (email available below). General contact details of provider: https://edirc.repec.org/data/unctach.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.