Original Paper

International Economics and Economic Policy

, Volume 10, Issue 4, pp 549-567

Special economic zones and growth in China and India: an empirical investigation

  • Chee Kian LeongAffiliated withDivision of Economics, University of Nottingham, Ningbo Email author 

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Abstract

This paper investigates the role of special economic zones (SEZs) in liberalizing the Chinese and Indian economies and their impact on economic growth. The policy change to a more liberalized economy is identified using SEZ variables as instrumental variables. The results indicate that export and FDI growth have positive and statistically significant effects on economic growth in these countries. The presence of SEZs increases regional growth but increasing the number of SEZs has negligible effect on growth. The key to faster economic growth appears to be a greater pace of liberalization.

Keywords

Special economic zones (SEZs) Openness Economic growth Asia China India