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GLOBAL OUTLOOK NEWS


UK to create 8 freeports


The British government announced eight newspecial economic zones in England, referred to as freeports, set to launch in late 2021. The freeports, which chancellor


of exchequer Rishi Sunak announced in earlyMarch as part of the measures introduced in the budget 2021, will be located mostly around the country’s largest cargo ports (Felixstowe, Liverpool, Hull, Southampton and London Gateway), and in three other sites, Teesside, Plymouth and East Midlands airport. The plan represents a key


element of the government’s “levelling-up” agenda to drive economic growth in deprived areas. According to the budget, companies located within the freeports will benefit fromtax breaks including no stamp duty, full rebates for construction and machinery investment, five years of zero business rates, and lower tariffs.■ NAOMIGALLAGHER


Dubai’sfree zonestoallow cryptoassets


Dubai’s free zone Dubai Multi Commodities Center (DMCC) has signed a memorandumof under- standing (MoU) with the country’s regulator Securities and Commodities Authority (SCA) to allowbusinesses to trade and issue crypto assets. “As we continue to make strides


within the crypto and blockchain space,DMCCis making it easier for crypto and blockchain businesses to set up and operate in Dubai,” said Ahmed bin Sulayem, executive chairmanand chief executive officer ofDMCC. In 2020,DMCClaunched


DigitalSugar, a blockchain-enabled trading platformfor sugar, and the Agriota e-Marketplace, a blockchain agri-commodity trading platform that connects rural farmers in India with the UAE’s food industry.■ SETHO’FARRELL


April/May 2021 www.fDiIntelligence.com FREE ZONE FOCUS


Isemergingcountries’ faith inSEZsjustified?


T


herearenowmorethan 5300SpecialEconomic


Zones(SEZs)intheworld, 90%ofwhich,accordingto Unctad,areindeveloping


andtransitioningeconomies. Yet the questionthat remainsis


whether the growingarmyofSEZsis deliveringonits objectives. TheShenzhenSEZinChina—


establishedin1980—hasbeenthe posterchildfor allzones,successfully transformingtheregionfromasleepy smalltownintoaglobalworkshopand China’s‘windowtotheworld’. Shenzhenhasbecomeamagnetfor foreigndirectinvestment(FDI)and jobs,andhasignitedamassiveprocess ofregionalindustrialupgrading. However,Shenzhenremains the


exception rather thantherule. Researchhascastdoubtsonthe


capacity ofSEZsacrossemerging countries todeliverontheirgoalsand generatemoreindirecteconomic benefits.Thebenefits ofSEZsdepend ontheircapacityto build forwardand backward linkageswithlocal firms. Yet, in the majorityofcases, this sort of spillover is, at best,unusual.A recentstudyIauthoredwithSusanne Frickfoundthat only27percent of foreign firms inSEZsindeveloping countrieshadestablishedsome connection with the industrial fabric of thehostcountry.Thosethatdid frequentlylookedforminorinputs. Thereasons behindthis disconnect rangedfromthenon-availabilityof the productsneededin the produc- tion process, to highpricesandlow quality of local productioninputs. Against thisbackdrop, the


economic fortunesof SEZs,andof the countries promotingthem,will dependonthe ability ofnewgenera- tionzonestomovebeyondwhatuntil nowhasmostlybeenanenclave-like approach.Overcomingthis requires goingbeyondprovidingsubsidies for FDIandincorporatingSEZpolicies intomoreproactiveandall-encom- passingdevelopment strategies that addressthesystemicbarriers—from skillsshortagesto infrastructuredefi-


citsandinnovation bottlenecks— whichlimit the interactionbetween firms inSEZsandthosein the places wheretheyarelocated. Somedevelopingcountries are


starting to react. InPort Elizabeth (SouthAfrica),theCoegaIndustrial Zonehasdevelopedlinkswiththe localeconomy, following programmes aimedat upskilling localsmalland medium-sizedenterprises,andboost- ing theiraccessto finance.The SantanderFreeZone(Colombia) providesEnglishlanguagecoursesto enablethelocalworkforcetopartici- pateinthezone’s activities.These piecemealinterventionscaneffec- tively increasethecapacity ofthelocal industrial to interactwithSEZtenants, andabsorbtheknowledgeandinnova- tivepracticestheycanoffer. SEZsareoftenexpensiveundertak-


ingsforgovernmentsandrepresenta significantopportunitycost.Assuch, thereisanurgentneedtomakeSEZs payoffforthehosteconomy. IntegratingSEZpoliciesintowider nationalandregionaldevelopment strategiesis,therefore,thewayforward andcouldmarkthebeginningofanew phasewherethebenefitsSEZscan deliverbecomemorewidespread.■


AndrésRodríguez-Poseisprofessorof economicgeographyattheLondon SchoolofEconomics(LSE).LSE researcherFedericoBartaluccialso contributedtothisarticle.


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