Meruyert SarsembayevaStudent of social sciences schoolNazarbayev University                                               ...
Outline Brief history of SEZ Economic impacts of SEZ:    Positive effects    Negative effects Conclusion             ...
Brief History of SEZ     SEZ:      Geographically Delimited areas      Different incentives to businesses               ...
Brief History of SEZAs a result: Figure 1: Foreign direct investment’s increase in China from 1978 to 2008 (Wang, 2009 ) ...
Economic impacts of SEZ: positive effects      • Employment generation                                Direct Employment Im...
Economic impacts of SEZ: positive effects   Employment generation  Philippine eco-zones’ direct employment1994           ...
Economic impacts of SEZ: positive effects Export developmentMajor share of exports in 2005:Asia and the Pacific:• Banglad...
Economic impacts of SEZ: positive effects    Foreign direct investment                                                   ...
Economic impacts of SEZ: negative effects      Exploitation of women                                                     ...
Economic impacts of SEZ: negative effects       Suppression of labor standards and core labor rightsThe International Lab...
ConclusionEconomic impact of Special Economic Zones can be as positive as negative.  Positive effects:                Ne...
Conclusiono Positive effects outweigh negative ones.o Negative effects are caused only by employment  generation.o Suppres...
Reference listAggarwal, A. 2007. Impact of Special Economic Zones on Employment, Poverty and Human development. Indian cou...
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Economic Impact of Special Economic Zones

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Economic Impact of Special Economic Zones

  1. 1. Meruyert SarsembayevaStudent of social sciences schoolNazarbayev University FIAS, 2008 FIAS, 2008 FIAS, 2008
  2. 2. Outline Brief history of SEZ Economic impacts of SEZ:  Positive effects  Negative effects Conclusion 2
  3. 3. Brief History of SEZ SEZ:  Geographically Delimited areas  Different incentives to businesses ShenzhenFirst established by the Peoples Republicof China in 1980 in Guangdong Province. Zhuhai(Yeung, Lee, and Kee, 2009) Shantou Support government’s efforts to: Promote Investment Create Employment Generate Export 3
  4. 4. Brief History of SEZAs a result: Figure 1: Foreign direct investment’s increase in China from 1978 to 2008 (Wang, 2009 ) The World Bank databases (2009):  3000 kinds of zones in 135 countries  $500 billion of direct trade industry. 4
  5. 5. Economic impacts of SEZ: positive effects • Employment generation Direct Employment Impact of Special Economic Zones • One of the key objectives Direct Percentage of for zone development employment national (millions employment people) Employment in the Global 68.441 0.21 Dominican Republic’s Asia and the Pacific 61.089 2.3% industrial free zones rose from 500 in 1970 to Americas 3.084 1.15% almost 200,000 today. Western Europe .179 (FIAS, 2008) Central and East Europe and 1.590 0.001% Central Asia The share of zone Middle East and North Africa 1.458 1.59% employment of national employment in the Arab Sub-Saharan Africa 1.040 0.20% Emirates 25% (FIAS, 2008) Table 1: Direct Employment Impact of Special Economic Zones Adapted from FIAS, 2008. 5
  6. 6. Economic impacts of SEZ: positive effects  Employment generation Philippine eco-zones’ direct employment1994 91,8602004 406,7522008 608,387 Figure 2. Adapted from Lima, 2009 6
  7. 7. Economic impacts of SEZ: positive effects Export developmentMajor share of exports in 2005:Asia and the Pacific:• Bangladesh (75.6 %);  in the Philippines the eco-zones’• Sri Lanka (67.1 %); share of national merchandise• the Philippines (78.2 %); exports increased from 22 % in 1995• Pakistan (50.3 %).(FIAS, 2008) to 78.2 % in 2005 (FIAS, 2008)Middle East and North Africa:• Lebanon (36.3 %);• Bahrain (68.9 %);• Morocco (61 %). (FIAS, 2008)  in Kenya the share increased from 3.5 % in 1997 to 19.3 % in 2003(FIAS,Americas:• Nicaragua (79.4 %); 2008)• the Dominican Republic(77%);• Panama (67 %). (FIAS, 2008)Sub-Saharan Africa:• Ghana (22.4 %);• Madagascar (80 %);• Mauritius (34.4 %).(FIAS,2008) 7
  8. 8. Economic impacts of SEZ: positive effects  Foreign direct investment In Mexico, the share of annual FDI In China, SEZs account for over 80 % of accounted for by maquiladora cumulative FDI. operations increased from 6 percent in 1994 to 23 percent in 2000 (Sadni- Jallab and Blanco de Armas, 2002).In the Philippines, for example, the 14-YEAR ECONOMIC ZONE INVESTMENTS INshare of FDI flows going to the PHILIPPINES PEZAcountry’s eco-zones increased from 1995 - 2008 3830 percent in 1997 to over 81 percent $ 30 Tin 2000 (UNCTAD, 2003). Times EPZA Bigger 1981 –1994 $778 B Adapted from Lima, 2009 8
  9. 9. Economic impacts of SEZ: negative effects  Exploitation of women The vast majority of workers in SEZ firms In Korea it was 70% are young womenIn Philippines the share in 1990 (Aggarwal, aged 16–25 yearsof women workers in 2007) (Aggarwal, 2007)total SEZ workforce was74% in 1980. Itremained the same in1994. (Aggarwal, 2007) It is found that women are paid less than men for similar jobs and are subjected to sexual harassment and violence. (Jahan 2003) 9
  10. 10. Economic impacts of SEZ: negative effects  Suppression of labor standards and core labor rightsThe International Labor Organization improved labor policies and practiceswithin zones, nevertheless, significant issues remain with some countries: Restrictions on the freedom of association and collective bargaining (in Bangladesh, the Dominican Republic, Nigeria, Pakistan, Panama, Sri lanka, Egypt) Bans on the right to strike (in Bangladesh, Namibia, Zimbabwe, Nigeria, Panama, Turkey) Non-observance of national labor legislation within zones (in Islamic Republic of Iran, Sudan). (FIAS, 2008 ) 10
  11. 11. ConclusionEconomic impact of Special Economic Zones can be as positive as negative.  Positive effects:  Negative effects:  Creation of employment  Exploitation of women opportunities  Suppression of labor  Export development standards and core labor rights  Promotion of foreign direct investment 11
  12. 12. Conclusiono Positive effects outweigh negative ones.o Negative effects are caused only by employment generation.o Suppression of labor standards and core labor rights was met only in some countries. Therefore, economic impact of Special Economic Zones is positive. 12
  13. 13. Reference listAggarwal, A. 2007. Impact of Special Economic Zones on Employment, Poverty and Human development. Indian council for research on international economic relations (194): 7-9. EBSCOhost database. http://www.ebscohost.com (accessed March 25).FIAS. 2008. Special Economic Zones: performance, lessons learned, and implications for zone development. EBSCOhost database. http://www.ebscohost.com (accessed March 25).Jahan, S. 2003. Reorienting development: Towards an Engendered Employment Strategy. Gender Poverty Summit. Quoted in Aggarwal, 2007, 9.Lima, L. 2009. PEZA. Department of International Development Working Paper No. 49, University of Oxford. Quoted in FIAS, 2008, 37.Sadni-Jallab, M. and E. B. Armas. 2002. A Review of the Role and Impact of Export Processing Zones in World Trade: The Case of Mexico. Institute of Development Studies, Brighton. Quoted in FIAS, 2008, 64.Wang, J. 2009. The economic impact of Special Economic Zones: Evidence from Chinese Municipalities. Job Market Paper. EBSCOhost database. http://www.ebscohost.com (accessed March 25).Wong, K. 1987. China’s Special Economic Zone Experiment: An Appraisal. Geografiska Annaler Series B, Human Geography 69 (1):27-40. Quoted in Yeung, Lee, and Kee, 2009, 223.World Bank. 2009. The World Bank. http://search.worldbank.org/data?qterm=special+economic+zone+worldwide&language=EN&format=html (accessed March 22, 2011).Yeung, Y., J. Lee, and G. Kee. 2009. Chinas Special Economic Zones at 30. Eurasian Geography and Economics 50 (2): 222- 240. EBSCOhost database. http://www.ebscohost.com (accessed March 25). 13

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