Special Economic Zones (SEZs): A Comparative Analysis for CPEC SEZs in Pakistan

Abstract

Special economic zones (SEZs) around the world are normally established with the aim of achieving various policy objectives: to attract foreign direct investment (FDI), to generate employment, and to be experimental with economic reforms via zone-exclusive trade policies. Pakistan has already signed Memorandums of Understanding (MOUs) for an upward of nine SEZs throughout the country in collaboration with China under the China-Pakistan Economic Corridor (CPEC) program. The purpose of this study is the assessment of socioeconomic impacts of various SEZs in diverse regions via comparative analysis. We especially focused on those SEZs that are similar to Pakistan in regard to the economic profiles of the respective states. Moreover, we particularly observed the literature on FDI phenomenon in this perspective to assess the extent to which the SEZs have helped improve the socioeconomic outcomes in the vicinity of the local communities surrounding such zones and hence, brought about broad-based economic development there. In the present study, SEZs that have proved to be poor in regard to export volume, ameliorating of the domestic labour force’s technical skills and overall inefficiency (such as those in Africa) are stacked up against those that have performed with high levels of productivity and viable economic gains such as those found within China, Bangladesh, and the ASEAN member states in order to decipher the common features of SEZs that enable them to be more effective in the long-term. Our analysis indicate that overall, African SEZs have not led to significant job creation or poverty reduction because of failures in implementing proper regulations. However, Asian SEZs on the other hand, have shown many socio-economic benefits. We thus concluded that we can co-opt African experiences with SEZs in order to improve the Asian framework for the same zone-type setup as Pakistan. This will certainly help us out to attain maximum socioeconomic benefits from its own CPEC-oriented SEZs and hence, allow for the development of a basic framework that Pakistani SEZs should adhere in order to avoid the meagre gains seen in failed zones such as those in Africa.