When Governments Suspend Their Own Rules
Reason magazine|March 2018

Special economic zones can be anything from tools of crony capitalism to seeds of a freer world order.

Tom W. Bell
When Governments Suspend Their Own Rules

ALL OVER THE world, in carefully delimited areas, governments have carved out exceptions to their own rules. These special economic zones, better known as SEZs, come in many sizes and types, ranging from simple dutyfree warehouses to jurisdictions the size and complexity of entire cities. Host governments typically roll back taxes, customs, and similar barriers to trade in their zones, but sometimes offer special labor, environmental, or financial regulations, too.

You probably live within a short drive of an SEZ: The United States has more than 400 of them, in the form of Foreign Trade Zones. Today most countries—about 75 percent—host SEZs of some sort. Worldwide, they number well over 4,000, and if you count micro-zones, some of them no bigger than parts of buildings, over 10,000.

Though the core idea runs back to ancient times (including the colonial proto-SEZs that gave rise to the United States), modern special economic zones started to emerge in 1948, when Operation Bootstrap made Puerto Rico a special trade and processing zone. A more popular model emerged in 1959, when the international airport in Shannon, Ireland, opened a special zone to accommodate transshipping and value-added processing. More recently, as with the zones that already fill China and that are planned in Saudi Arabia and Honduras, SEZs have grown to cover whole cities and areas of law.

The Political Economy of Special Economic Zones casts a coolly objective eye on this latest institutional mutation to issue from the roiling competition of global trade. Its author, Lotta Moberg, a recent graduate of George Mason University’s economics doctoral program and now an analyst at the investment bank William Blair & Co., finds both opportunities and challenges in their rise.

This story is from the {{IssueName}} edition of {{MagazineName}}.

Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.

This story is from the {{IssueName}} edition of {{MagazineName}}.

Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.

MORE STORIES FROM REASON MAGAZINEView all
Gimme Shelter  - The U.S. confronts a growing homelessness problem. Does Miami have the answer?
Reason magazine

Gimme Shelter - The U.S. confronts a growing homelessness problem. Does Miami have the answer?

The U.S. confronts a growing homelessness problem. Does Miami have the answer?

time-read
10+ mins  |
July 2024
AI Is Coming for Hollywood's Jobs
Reason magazine

AI Is Coming for Hollywood's Jobs

But so is everyone else.

time-read
10+ mins  |
June 2024
AI Can Do Paperwork Doctors Hate
Reason magazine

AI Can Do Paperwork Doctors Hate

With help from AI, doctors can focus on patients.

time-read
4 mins  |
June 2024
Antitrust May Smother the Power of AI
Reason magazine

Antitrust May Smother the Power of AI

Left alone, AI could actually help small firms compete with tech giants.

time-read
3 mins  |
June 2024
A Brief, Biased History of the Culture Wars
Reason magazine

A Brief, Biased History of the Culture Wars

THE FIRST PAR AGR APH of the book jacket lays it out: “There is a common belief that we live in unprecedented times, that people are too sensitive today, that nobody objected to the actions of actors, comedians, and filmmakers in the past.

time-read
5 mins  |
July 2024
FAMILIES NEED A VIBE SHIFT
Reason magazine

FAMILIES NEED A VIBE SHIFT

THE AUTHORS OF FOUR NEW BOOKSWITH 24 KIDS BETWEEN THEM-SAY THE AMERICAN FAMILY NEEDS A COURSE CORRECTION.

time-read
10+ mins  |
July 2024
"The Past Is There To Teach Us What Can Happen'
Reason magazine

"The Past Is There To Teach Us What Can Happen'

Hardcore History's Dan Carlin on hero worship and moral assumptions in the study of the past

time-read
10+ mins  |
July 2024
Cutting Off Israel
Reason magazine

Cutting Off Israel

ENDING U.S. AID WOULD GIVE WASHINGTON LESS LEVERAGE IN THE MIDDLE EAST. THAT’S WHY IT’S WORTH DOING.

time-read
10+ mins  |
July 2024
WHAT CAUSED THE D.C.CRIME WAVE?
Reason magazine

WHAT CAUSED THE D.C.CRIME WAVE?

GOVERNMENT MISMANAGEMENT, NOT SENTENCING REFORM OR SPARSE SOCIAL SPENDING, DESERVES THE BLAME.

time-read
10+ mins  |
July 2024
States Turn Their Backs on Criminal Justice Reform
Reason magazine

States Turn Their Backs on Criminal Justice Reform

IT WAS IMPOSSIBLE to avoid the “strange bedfellows” cliché when reading about the criminal justice reform movement in the 2010s.

time-read
5 mins  |
July 2024