When to Use an SEZ
At a Glance
- Given the right circumstances, SEZs can serve to attract investment, create jobs, support industrialization, and facilitate trade.
- They are most effective when challenges in the wider economy (e.g., trade barriers) are unlikely to be solved at a domestic level or in the medium term (and even then, cheaper or more targeted options may be preferable).
- For SEZs to succeed, there must be a commercial case for investment. In other words, they cannot rely exclusively on fiscal incentives.
- Special Economic Zones in Africa: Comparing Performance and Learning from Global Experience (Thomas Farole)
- Breaking out of Enclaves Leveraging Opportunities from Regional Integration in Africa to Promote Resource-Driven Diversification (Gozde Isik, Kennedy Opalo, Perrine Toledano)
Breaking out of Enclaves Leveraging Opportunities from Regional Integration in Africa to Promote Resource-Driven Diversification
This report explores the relationships between extractive resources, regional integration, and economic diversification. It discusses the ...
This resource outlines the requirements for a special economic zone (SEZ) to succeed. Of specific interest is chapter 4 (pages 111 to 130), ...
The purpose of this review is to inform and identify lessons from special economic zone (SEZ) policies across countries and across the World ...
This article raises the question of whether spatial industrial policies can be designed to facilitate clustering, with a focus on creating ...
This study evaluates the overall economic performance of special economic zones and analyzes key development trends in terms of zone ...
The World Investment Report monitors foreign direct investment trends and outlines investment policy developments around the world. The 2019 ...
SEZs can play a powerful role in attracting investment, generating jobs, supporting industrialization, and facilitating trade. However, in many cases, they are not the most appropriate or viable tool. For example, most of the SEZs introduced in South Africa in the early 2000s failed to induce significant job creation or investment; instead, many existing companies simply relocated to the zones, reaped benefits, but did not create synergies. This was partly due to the use of these zones for the spatial development of poor regions—a task that SEZs are generally ill-suited for.
The national investment environment as well as the capacity and capability of the local economy determine which types of investment can be attracted and, critically, which links to the local economy are viable. Opportunities might also arise from creating a distinct project finance environment within an SEZ during the project development or expansion stages (for example, to enable local suppliers to expand their capacity).
  Anthony Altbeker, Katie Mckeown, and Ann Bernstein, Special Economic Zones:
Lessons for South Africa from International Evidence and Local Experience (Johannesburg: Centre for Development and Enterprise, 2012).
  World Bank Group, Special Economic Zones: An Operational Review of Their Impacts
(Washington, DC: World Bank, 2017).