12/20/2012

The Editor's read: The Anatomy of Special Economic Zones by Maurits Ruis

I will post in the following days three book reviews that I warmly suggest my readers to read: Future Practice. Conversations from the edge of architecture by Rory Hyde; The Anatomy of Special Economic Zones, by Maurits Ruis, and Making the Geologic Now edited by Elizabeth Ellsworth and Jamie Kruse (of Smudge Studio).
I will start with the review of Rory Hyde's book. I hope to have a conversation with him. I am currently reading the two other books.
Below, I post an abstract of Maurits RuisThe Anatomy of Special Economic Zones.
A very short ebook, 57 pages. Those who are familiar with Keller Easterling's research on Extra Statecraft will certainly appreciate this ebook as Maurits Ruis addresses closely related issues.


A critical History
Special Economic Zones have in some way or another for hundreds of yeas, but the modern SEZ developed significantly in the period after the Second World War. In this period, the SEZ has been able to benefit from growing international specialization, the expansion of the manufacturing activities of transnational corporations and an increasing orientation towards export (ILO 2008). The first known instance of a modern SEZ was industrial park set up in Puerto Rico in 1947 to attract investment from the USA (Dohrmann 2008).
An important catalyst in the development of the modern SEZ was introduction of the standardized shipping container in 1956. The container caused loading cost of cargo to drop from $5.86 per US ton to just under 16 cents (Poston 2006), which made it possible for firms to benefit from lower labour cost overseas whilst remaining cost-effective. Illustrative for the dependency of SEZs on shipping containers is the fact that nowadays there are very few landlocked countries that have adopted free zone regimes (Bost 2001).
The first SEZs appeared in Asia in the 1960s, which would become the nursery home for the modern SEZ in the years to follow. In these years, The US semiconductor industry began offshoring intensive manufacturing activities such as assembly to Malaysia, Hong Kong and Taiwan. This move allowed the semiconductor industry to remain cost-competitive as new foreign rivals emerged in countries such as Japan (GAO 2006). At that point, the only benefits for SEZ host countries were the creation of jobs and income of foreign exchange generated by the exportation of products, but no further benefits to the local economy were provided (Cowaloosur 2011).
Urban Laboratories
Although the first SEZ in Asia was established in Kandla, India in 1965, the history of the modern SEZ has very much turned out to be a Chinese history. China has been instrumental in the development of the modern SEZ, and has also been most successful in reaping its benefits, growing its domestic economy significantly, and lifting millions out of poverty. When India introduced its national SEZ policy in 2005, it was modeled closely after the Chinese model (Leong, n.d.).
Perhaps China's success with SEZs is owed to the fact that China was not unfamiliar with the concept of designated areas with an exceptional status. As early as 1557, Macau was rented to Portugal by the Chinese empire as a trading port, and in 1842, the French, British and America concessions were granted in Shanghai following the 1839-42 Opium War. The introduction of the modern SEZ in communist China was due to the decision of Deng Xiaoping in 1980 to start using SEZs to experiment with the free market economy, a move he referred to as 'crossing the river, feeling the stones one at a time'. To that end, Shenzhen, Zhuhai, Xiamen and Shantou were given the status of Comprehensive Special Economic Zone (CSEZ) (Leong, n.d.)

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