1. Meruyert Sarsembayeva
Student of social sciences school
Nazarbayev University
FIAS, 2008
FIAS, 2008
FIAS, 2008

2. Outline
 Brief history of SEZ
 Economic impacts of SEZ:
 Positive effects
 Negative effects
 Conclusion
2

3. Brief History of SEZ
SEZ:
 Geographically Delimited areas
 Different incentives to businesses
Shenzhen
First established by the Peoples Republic
of 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. Brief History of SEZ
As 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. 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. Economic impacts of SEZ: positive effects
 Employment generation
Philippine eco-zones’ direct employment
1994
91,860
2004 406,752
2008 608,387
Figure 2. Adapted from Lima, 2009
6

7. Economic impacts of SEZ: positive effects
 Export development
Major 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. 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 IN
share of FDI flows going to the PHILIPPINES
PEZA
country’s eco-zones increased from 1995 - 2008
38
30 percent in 1997 to over 81 percent $ 30 T
in 2000 (UNCTAD, 2003).
Times
EPZA
Bigger
1981 –1994
$778 B Adapted from Lima, 2009 8

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 women
In Philippines the share
in 1990 (Aggarwal, aged 16–25 years
of women workers in
2007) (Aggarwal, 2007)
total SEZ workforce was
74% in 1980. It
remained the same in
1994. (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. Economic impacts of SEZ: negative effects
 Suppression of labor standards and core labor rights
The International Labor Organization improved labor policies and practices
within 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. Conclusion
Economic 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. Conclusion
o 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. Reference list
Aggarwal, 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. China's Special Economic Zones at 30. Eurasian Geography and Economics 50 (2): 222-
240. EBSCOhost database. http://www.ebscohost.com (accessed March 25). 13