Existence and Relevance of Economic Zones - A Strategic Development Perspective

Abstract

In this paper, economic zones have been evaluated through descriptive analysis, and the context of their existence and relevance is substantiated by theoretical reasoning. A classification model and critical dimensions for evaluation were developed and deployed to gather and analyze data on economic zones. An exhaustive exercise was undertaken for identifying, collecting, consolidating, and analyzing data on economic zones, which provided insight into the existence of 3,588 economic zones geographically spread across 141 countries classified into 13 economic zone types. Comparisons on eight external and internal factors that affect zone presence have been thoroughly undertaken to discern the strategic development of the national policy of different countries for utilizing economic zones as tools for socio-economic development. The results provide a rationale for the relevance of economic zones by establishing relationships between country context, and economic zone taxonomic data. One of the important conclusions of this research is that majority of economic zones are based in factor-based countries, involved with low to medium-innovation industries, but are gradually either evolving or diverging into clusters; and continue to be a crucial tool for 'dynamic national socio-economic development' program in developing countries. A significant portion of countries have been unable to use economic zones as tools for industrial development and up-gradation, except UAE which has derived significant benefits in totality through zones, other countries that can further enhance the output of their zones include the Philippines, Vietnam, India, US, China, Thailand, Columbia, Indonesia, and Kenya. This research is the first step to undertake comprehensive studies into evaluating variables that drive, and outcomes that are delivered through economic zones.

Keywords: Economic zones, economic development, clusters, strategy

JEL Classification: F18, L53, L78,O11