ABSTRACT
The political economy discussion of SEZs lends itself to a variety of policy implications for the different actors involved in zone planning and development. This chapter discusses how outside advisors on SEZs may deal with the fact that the policy sometimes does more harm than good. It lays out advice useful to a government attempting to preserve its rents by dividing the economy through the use of SEZs. The chapter discusses useful tactics for a political minority elite hoping to use SEZs as steps toward broader economic reforms. Governments seeking to prevent SEZ leakage that could threaten import-substituting firms should be careful about what kind of zones they introduce. overnments seeking to avoid reform should therefore opt for smaller industrial parks, such as export processing zones (EPZs). Any outside observer or consultant should ponder the political economy of SEZs before offering advice. Whether the SEZ scheme will be beneficial depends on how aligned the interests are with benefiting the economy.
