Special Economic Zones: South America Lags Behind

By Moises Rendon

It’s no coincidence that Hong Kong, Shenzhen and Dubai have been beacons of economic progress. These areas have attracted the most important high-technology firms and received vast influxes of foreign direct investment (FDI) in recent years. The three share a successful history of operating as what is known as a Special Economic Zone (SEZ), a unique regulatory status which has facilitated rapid economic development. While China, the United Arab Emirates, and other countries have reaped the benefits of SEZs, South American countries have yet to realize the potential benefits SEZs might offer their economies.

An SEZ is a demarcated geographic area within a country’s national boundaries where the rules of business are different from those that prevail in the surrounding territory. Compared to the economic regulations of the host countries, these zones typically include more friendly investment conditions, such as tax and customs exemptions. The goal is to create a globally competitive economic area that, through cost reductions and administrative simplification, attracts corporate investments to encourage new economic activity.

Shenzhen_CBD_and_River

Shenzhen was the first SEZ in China, and remains an economic hub.

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