Rising Scholar: A Tale of Two Countries: SEZ-led Growth in India and China

Abstract

Special Economic Zones (SEZs) played an instrumental role in China’s transformation from a closed, impoverished nation to a liberalized economic powerhouse in just forty years. This paper analyzes how developing countries can use SEZs for economic growth by comparing SEZ policies in China and India, as India also used their zones for investment attraction and technological innovation. The paper concludes that SEZ policies are most successful when used strategically to experiment reform measures for economic liberalization. Other factors important for SEZ success include setting up the right incentives for zone managers to achieve economic goals, granting autonomy for local governments to adapt policies, and taking measures to avoid corruption, especially during the land acquisition process. It is imperative for countries seeking to implement SEZs to understand the underlying causes of success or failure and adopt policies to maximize their benefits for economic growth.