Trade
Special Economic Zone (SEZ)
Definition
A geographic area within a country that operates under different economic regulations — typically lower taxes, lighter regulation, and streamlined customs — to attract foreign investment.
Explanation
China's Shenzhen SEZ, established in 1980, is the most famous success story — transforming a fishing village into a $400B tech metropolis. SEZs now exist in over 140 countries with 5,000+ zones worldwide. They work best when they create genuine comparative advantage (infrastructure, skills) rather than just tax giveaways. Ethiopia, Vietnam, and Bangladesh have used SEZs to jumpstart manufacturing.