Economic Policies of SEZs
- Special tax incentives for foreign investments in the SEZs.
- Greater independence on international trade activities.
- Economic characteristics are represented as "4 principles":
- Construction primarily relies on attracting and utilizing foreign capital
- Primary economic forms are Sino-foreign joint ventures and partnerships as well as wholly foreign-owned enterprises
- Products are primarily export-oriented
- Economic activities are primarily driven by market forces
SEZs are listed separately in the national planning (including financial planning) and have province-level authority on economic administration. SEZs local congress and government have legislation authority.
Leong (2012) investigates the role of special economic zones (SEZs) in liberalizing the Chinese and Indian economies and their impact on economic growth. The policy change to a more liberalized economy is identified using SEZ variables as instrumental variables. The results indicate that export and FDI growth have positive and statistically significant effects on economic growth in these countries. The presence of SEZs increases regional growth but increasing the number of SEZs has negligible effect on growth. The key to faster economic growth appears to be a greater pace of liberalization.
Read more about this topic: Special Economic Zones Of The People's Republic Of China
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