Douglas Zhihua Zeng[1]

 

No. E2014004         July 2014

 

 

 

Abstract: This study briefly summarizes the development experiences of special economic zones (SEZs) in China and Africa, and also assesses the preliminary results of the Chinese investments in SEZs in Africa, reflecting some lessons learned so far.  It also makes recommendations on how to better unleash the power of SEZs and industrial zones in Africa through strategically leveraging the Chinese experiences. 

China’s growth miracle can be largely contributed to its successful SEZ programs, which piloted many market-oriented reforms. However, while China is rebalancing its economy today, these SEZs also face new challenges, such as vicious competitions and high level of homogeneity, environmental degradation and poor integration with urban development. This calls for a bigger role for the market.  

In sub-Sahara Africa, the available evidence suggests that its experience with traditional EPZs and IZs has been relatively poor, except a few countries such as Mauritius. The key challenges include poor regulatory and institutional framework, lack of effective strategic planning, weak governance and implementation capacity, and inadequate infrastructure. 

Since 2006, China began to implement SEZ projects globally, including four countries in SSA. It is still too early to conduct a full assessment of these zone projects, however, evidence shows that some zones have begun to attract significant amount of investments and make important contributions to local economy. But overall the implementation of Chinese SEZs in SSA has been slow compared with other regions. The main challenges include access to land, regulatory barriers, resettlement and coordination issues, lack of external infrastructure, etc.  

Key words: special economic zone, industrial agglomeration, industrial park, industrial zone, China, Africa, investment, FDI

JEL code: L5, L6, O1, O2, O3, O4, O5, R1, E2

No. E2014004

 

[1] The author is a senior economist at the World Bank and an expert on economic policy, cluster/industrial park development, innovation and competitiveness, as well as knowledge economy. He has over twenty years’ experiences in advising governments and private sectors on industrial development and business investment and has worked on countries in the regions of Africa, East Asia and Pacific, Latin America and the Caribbean, and Europe and Central Asia. He has published many books and academic papers and a frequent speaker on international forums. Recent publications (including those co-authored/edited) include Building Engines for Growth and Competitiveness in China: Experience with Special Economic Zones and Industrial Clusters; Knowledge, Technology, and Cluster-Based Growth in Africa; Promoting Enterprise-Led Innovation in China; Innovation for Development and the Role of Government; and Enhancing China’s Competitiveness through Lifelong Learning, among others. He can be reached at Zzeng@worldbank.org. The author is grateful for the support and guidance of Profession Justin Yifu Lin (Honorary Dean, National School of Development, Peking University), Professor Yang Yao (Dean, National School of Development, Peking University) and World Bank colleagues Ganesh Rasagam, Irina Astrakhan, Thomas Farole, Gokhan Akinci and Michael Engman.