Special Economic Zone (SEZ) & Institutional Building for Entrepreneurship

Abstract

Encouraged by the phenomenal success of Special Economic Zones (SEZs) in the People's Republic of China which first used this model to attract Foreign Direct Investment (FDI), Technological Transfers and Managerial Expertise, developing countries such as India, Indonesia, Iran, Malaysia, North Korea, South Korea, Philippines, Russia etc uses SEZ driven economic growth to accelerate the rate of GDP in their respective countries. SEZs are specially designated geographical areas within the country that possess special economic regulations which normally incorporate calibrated fiscal and monetary policy mix of liberalized trade regime like decontrol, delicense and deregulations that attract huge investment from domestic as well as FDI to take advantage of the favourable trade policies. These policies are normally announced by the government in the EXIM (Export Import) and Foreign Trade Policies periodically to boost the investment of the nation. These SEZs contain special measures that are conducive to FDI and the units operating in the SEZ get tax incentive and the opportunity to pay lower tariffs. The ultimate goal of forming SEZ is to incorporate vibrant institutional building to accelerate economic activities through pro entrepreneurial policies. A single SEZ can contain multiple Free Trade Zones (FTZ), Export Processing Zone (EPZ), Free Zones (FZ), industrial Estates (IE), Free Ports and urban Enterprise Zones etc. SEZs are normally implemented through a variety of institutional structures like fully public, fully private and on Public-Private Partnership (PPP) models. This paper will make an empirical analysis of SEZ to understand the economies of scale in SEZ and the institutional building for entrepreneurship that can accelerate economic growth of a nation