Special economic zone

The term Special Economic Zone (SEZ) is an area in which business and trade laws differ from the rest of the country. SEZs are located within a country's national borders, and their aims include: increased trade, increased investment, job creation and effective administration. To encourage businesses to set up in the zone, financial policies are introduced. These policies typically regard investing, taxation, trading, quotas, customs and labour regulations. Additionally, companies may be offered tax holidays, where upon establishing in a zone they are granted a period of lower taxation.

The creation of special economic zones by the host country may be motivated by the desire to attract foreign direct investment (FDI).^[1]^[2] The benefits a company gains by being in a Special Economic Zone may mean it can produce and trade goods at a lower price, aimed at being globally competitive.^[1]^[3] The operating definition of a SEZ is determined individually by each country. In some countries the zones have been criticized for being little more than Chinese labor camps, with workers denied fundamental labor rights.^[4]^[5]

History[edit]

Free zones and Entrepôts have been used for centuries to guarantee free storage and exchange along trade routes.^{[citation needed]}

Modern SEZs appeared from late 1950s in industrial countries. The first was in Shannon Airport in Clare, Ireland.^[6] From the 1970s onward, zones providing labor-intensive manufacturing have been established, starting in Latin America and East Asia. These zones attracted investment from multinational corporations.^[1]

A recent trend has been for African countries to set up SEZs in partnership with China.^[2]

Types[edit]

The term Special Economic Zone can include:^[1]

Free trade zones (FTZ),
Export processing zones (EPZ),
Free zones/ Free economic zones (FZ/ FEZ),
Industrial parks/ industrial estates (IE),
Free ports
Bonded logistics parks (BLP),
Urban enterprise zones.

Type	Objective	Size	Typical Location	Typical Activities	Markets
FTZ	Support trade	<50 hectares	Port of entry	Entrepôts and trade related	Domestic, re-export
EPZ (traditional)	Export manufacturing	<100 hectares	None	Manufacturing, processing	Mostly export
EPZ (single Unit/free enterprise)	Export manufacturing	No minimum	Countrywide	Manufacturing, processing	Mostly export
EPZ (hybrid)	Export manufacturing	<100 hectares	None	Manufacturing, processing	Export, domestic
free port/SEZ	Integrated development	>1000 hectares	None	Multi-use	Internal, domestic, export