Skip to main content

Advertisement

SpringerLink
Log in

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

  • Original Paper
  • Published:
International Economics and Economic Policy Aims and scope Submit manuscript

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.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Similar content being viewed by others

References

  • Aggarwal A (2004) Export processing zones in India: analysis of the export performance. ICRIER working paper 148

  • Arunachalam P (2008) Special economic zones in india: principles, problems and prospects. Serials Publications, New Delhi, India

    Google Scholar 

  • Arunachalam P (ed) (2009) Social, political, economic and environmental concerns of special economic zones in India: an international experience. Serials Publications, New Delhi, India

    Google Scholar 

  • Bosworth B, Collins S (2008) Accounting for growth: comparing China and India. J Econ Perspect 22(1):45–66

    Article  Google Scholar 

  • Das G (2009) Special economic zones in India: lessons from China. New Century Publications, New Delhi, India

    Google Scholar 

  • Dollar D, Kraay A (2001) Trade, growth and poverty. World Bank working paper no. 2615

  • Dollar D, Kraay A (2002) Growth is good for the poor? J Econ Growth 7(3):195–225

    Article  Google Scholar 

  • Frankel J, Romer (1999) Does trade cause growth? Am Econ Rev 89(3):379–399

    Article  Google Scholar 

  • Ge W (1999) Special economic zones and the economic transition in China. World Scientific, Singapore

    Google Scholar 

  • Graham EM (2004) Do export processing zones attract fdi and its benefits: the experience from China. Int Econ Econ Policy 1:87–103

    Article  Google Scholar 

  • Hamada K (1974) An economic analysis of the duty-free zone. J Int Econ 4:225–241

    Article  Google Scholar 

  • Hausman JA (1978) Specification tests in econometrics. Econometrica 46:1251–1271

    Article  Google Scholar 

  • Kundra A (2000) The performance of India’s export zones: a comparison with the Chinese approach. Sage Publications, New Delhi

    Google Scholar 

  • Krugman P, Obstfeld M (1991) International economics: theory and policy, 2nd edn. Harper Collins, New York

    Google Scholar 

  • Lewer J, van den Berg H (2003) How large is international trade effect on economic growth? J Econ Surv 17(3):363–396

    Article  Google Scholar 

  • Madani D (1999) A review of the role and impact of export processing zones. World Bank Policy Research working paper 2238

  • Palit A, Bhattacharjee S (2009) Special economic zones in India: myths and realities. Anthem Press, New Delhi, India

    Google Scholar 

  • Park J (1997) The special economic zones of China and their impact on its economic development. Praeger, London

    Google Scholar 

  • Schweinberger AG (2002) Are special economic zones desirable? In: Woodland AD (ed) Economic theory and international trade: essays in honour of Murray C. Kemp. Edward Elgar, Cheltenham, UK, pp 86–103

  • Wei S (1993) The open door policy and China’s rapid growth: evidence from city-level data. NBER working paper no. 4602

  • Wong K, Chu DKY (1984) Export processing zones and special economic zones as generators of economic development: the Asian experience. Geogr Ann Ser B 6:1–16

    Article  Google Scholar 

  • World Bank (1993) East Asian miracle. Oxford University Press, Oxford

    Google Scholar 

  • World Bank (2009) World development indicators 2009. World Bank, Washington, DC

    Book  Google Scholar 

  • Young L, Miyagiwa KF (1987) Unemployment and the formation of duty-free zones. J Dev Econ 26:397–405

    Article  Google Scholar 

  • Zeng DZ (ed) (2010) Building engines for growth and competitiveness in China: experience with special economic zones and industrial clusters. The International Bank for Reconstruction and Development and The World Bank, Washington DC

Download references

Acknowledgements

I am grateful to Yothin Jinjarak and Jinyu for their help on the data sources. I would like to thank Kang Chen, Rajeh Mehta, conference and seminar participants at the DEGIT conference, the University of Melbourne, Singapore Economic Review Conference and Nanyang Technological University for their insightful comments and suggestions. I am deeply appreciative of the invaluable insights and suggestions of anonymous referees, which have improved the paper considerably.

Author information

Authors and Affiliations

  1. Division of Economics, University of Nottingham, Ningbo, 199 Taikang East Road, Ningbo, 315100, China

    Chee Kian Leong

Authors
  1. Chee Kian Leong
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Chee Kian Leong.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Leong, C.K. Special economic zones and growth in China and India: an empirical investigation. Int Econ Econ Policy 10, 549–567 (2013). https://doi.org/10.1007/s10368-012-0223-6

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10368-012-0223-6

Keywords

Search

Navigation