Special Economic Zones Impact and Vulnerabilities CIIP - - PowerPoint PPT Presentation

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Special Economic Zones Impact and Vulnerabilities CIIP - - PowerPoint PPT Presentation

Nov 12, 2023 262 likes •403 views

Special Economic Zones Impact and Vulnerabilities CIIP Definitions of Special Economic Zones DEFINITION: For the purpose of the empirical analysis, the definition of SEZs: o Includes - Traditional and Hybrid EPZs, Freeport/ SEZ, and

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CIIP

Special Economic Zones

Impact and Vulnerabilities

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CIIP

Definitions of Special Economic Zones

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DEFINITION:

  • For the purpose of the empirical analysis, the definition of SEZs:
  • Includes - Traditional and Hybrid EPZs, Freeport/ SEZ, and

Enterprise Zones

  • Does not include – Free Trade Zones, Free Enterprises,

Technological and Science Parks

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CIIP Th The popula larit ity of f SE SEZs has boomed sin since th the 90s

500 1000 1500 2000 2500 3000 3500 4000 1975 1986 2006

Number of Special Economic Zones World

20 40 60 80 100 120 140 1975 1986 2006

Number of Countries with Special Economic Zones World

Source: FIAS (2007) 3

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CIIP

SEZ Performance SEZ Program Incentives Package

  • Fiscal and non fiscal

Requirements

  • Investment requirement
  • Ownership requirement

Program characteristics

  • Independence of

regulator

  • Time of program

establishment SEZ Characteristics

  • Maturity
  • Size
  • Operator
  • Location
  • Industry focus
  • Infrastructure
  • Services offered

Contextual Factors National and Regional

  • Institutional quality/ Rule
  • f Law
  • Access/ proximity to

markets

  • Income level
  • Human Capital
  • Population Density

Collecting through desk research, emails and follow up phone calls

Th The conceptual fr framework

4

Nightlights as proxy for SEZ performance

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CIIP

23 237 7 SE SEZs in in 17 17 cou

  • untrie

ies – 5 5 more countries ar are to

  • be ad

added

5

Included Being added

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CIIP

Fin Findings fr from th the data base ase

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SEZs are largest in SSA and ECA Private SEZs are most common in LAC, while public involvement is higher in Asia & SSA 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% SSA LAC EAP ECA SA Public PPP Private

308 117 204 343 112

50 100 150 200 250 300 350 400 SSA LAC EAP ECA SA Zone operator % of SEZs Average size In ha

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CIIP

Fin Findings fr from th the data base ase

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Independent regulators exist across all regions, but are less frequent in SSA, LAC & EAP Corporate tax exemptions are most generous in SSA, LAC and South Asia 12,5 13,2 9,8 4,1 14,6 2 4 6 8 10 12 14 16 SSA LAC EAP ECA SA 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% SSA LAC EAP ECA SA Independent Not independent Corporate tax exemption Average number of years with 100% exemption Independence of zone regulator % of countries

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CIIP

30 103 104 Shrinking Stable Growing

SE SEZ grew on

  • n average by

y 9.9 9.9%, but t th there is is a a lar large var ariabili ility in in SE SEZ performance acr across zones

SEZ performance 2007 - 2012 Number of SEZs SEZ performance 2007 – 2012: Average growth of 9.9% across SEZs, but median growth of only 2.4% and standard deviation of 21% suggest large spread in performance

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CIIP

Str Strongest growth in in SS SSA an and ECA, A, but t performin ing an and non

  • n-

performin ing zon

  • nes can

an be fou

  • und in

in all all regions

80% 61% 31% 67% 64% 20% 26% 54% 31% 13% 15% 2% 36% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% SSA LAC EAP ECA SA SEZ Performance by region Growing Stable Shrinking +17% +11% +6% +22%

  • 1%

Average growth

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CIIP

Few program an and SE SEZ ch characteristics ar are systematic icall lly correlated with ith SE SEZ performance

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Contextual factors SEZ program SEZ characteristics Subsidized utilities Differentiated labour regulations Corporate tax exemption in wealthier regions National one-stop-shop Foreign ownership requirement Minimum Investment Requirement Independence of zone regulator Time policy introduced Years in operation Type of operator Focus on high-tech Size Distance Port Distance largest city One-stop-shop onsite Power sub-station onsite Proximity to large markets Regional GDP per capita Regional educational level Control of corruption Regional population density Pre-exiting industrial base Positive impact Negative impact No correlation

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CIIP Find indin ings fr from th the analy lytic ical l work rk

  • SEZ performance is highly context dependent – zone and program characteristics that may work

in one context, may not in others. There are is still some common themes:

  • Contextual factors play a major role
  • Investors are looking for cheap locations
  • With proximity to large markets and ideally a proven track record of industrial production
  • Zone specific
  • Growth is difficult to sustain over time  SEZ programs can help to make an economy

more dynamic in the short/ mid-term.

  • Upgrading the technological component or value-added through SEZs is challenging
  • Program specific
  • Utility subsidies most incisive part of incentive packages.
  • Corporate tax breaks only seems to make a difference in more developed countries.

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CIIP

Thank You