SPECIAL ECONOMIC ZONES
Direct and indirect economic contributions of SEZs
Zones can give a boost to investment, exports and jobs. However, they are neither a precondition nor a guarantee for above-average performance on FDI and GVC participation. The overall impact on economic growth tends to be temporary: after a build-up period, most zones grow at the same rate as the national economs.
Investment attraction. Zones are a key investment promotion tool and can play an important role in attracting FDI (figure IV.18). Through adequate infrastructure and best practice, zones can to a certain degree compensate for an adverse investment climate. Unfortunately, the impact of zones on FDI – and especially on additional FDI that would not have been attracted without SEZs – is hard to measure because data are scarce. Countries and international statistics (including UNCTAD’s FDI data) do not track investment in zones separately from investment outside zones, and SEZs themselves mostly do not register foreign investment flows separately.
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The policy and institutional framework for SEZs across the majority of developing and transition economies is remarkably similar, with most adopting a dedicated law that sets out the framework enabling the development of SEZs and the investment conditions within zones. Actual zone operating conditions are determined by zone-level decrees and lower levels of government, as well as developers and management companies, which are more and more often private operators. Although SEZs are by definition an exception to the general policy regimes in the countries where they are located, the attractiveness of zones is still significantly influenced by more general (national) policy frameworks beyond direct legislation on SEZs, including trade and investment policies.