Special Economic Zones and The State of Pakistan’s Economy

PIDE Knowledge Brief No. 27:2021
Publication Year : 2021

Pakistan has initiated various economic reforms aimed at enhancing growth of the economy under China-Pakistan Economic Corridor (CPEC). One of the major components under this collaboration is industrial cooperation under which Special Economic Zones (SEZs) have been planned along the CPEC routes across the country. Over the years, SEZs have been successfully implemented by many countries around the world which include Republic of Korea, Taiwan, China, Vietnam, Bangladesh, Mauritius, the Dominican Republic and El Salvador. These SEZs have paved their way towards industrialisation, economic development and growth. SEZs have also brought Foreign Direct Investment (FDI) to the host country resulting in foreign exchange earnings, enhancing exports and government revenues for the country. Moreover, SEZs have also helped in technology transfers, adoption of modern management practices along with skills up-gradation in most of the emerging economies. While in many countries SEZs have succeeded in transforming their economies, however, it costs the governments in terms of fiscal incentives which are provided to attract investors at the zones. Thus, success does not come without a cost. Also, it is important to draw on the experiences of Pakistan’s neighbouring countries with SEZs and discuss best practices for Pakistan.