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Formation of special economic zone, liberalized FDI policy and agricultural productivity

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  • Chaudhuri, Sarbajit
  • Yabuuchi, Shigemi

Abstract

Formation of Special Economic Zone (SEZ) using agricultural land to promote industrialization has recently been one of the most controversial policy issues in many developing economies including India. This paper critically evaluates the consequences of this policy in terms of a three-sector Harris-Todaro type general equilibrium model characterizing a typical developing economy. It finds that agriculture and SEZ can grow simultaneously provided the government spends a substantial amount of its resources on irrigation projects and other infrastructural development designed at improving the efficiency of land. Agricultural wage and aggregate employment in the economy may also improve owing to this policy.

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Bibliographic Info

Article provided by Elsevier in its journal International Review of Economics & Finance.

Volume (Year): 19 (2010)
Issue (Month): 4 (October)
Pages: 779-788

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Handle: RePEc:eee:reveco:v:19:y:2010:i:4:p:779-788

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Web page: http://www.elsevier.com/locate/inca/620165

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Keywords: Special economic zone FDI policy Agricultural productivity Rural wage Urban unemployment;

References

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  1. Harris, John R & Todaro, Michael P, 1970. "Migration, Unemployment & Development: A Two-Sector Analysis," American Economic Review, American Economic Association, vol. 60(1), pages 126-42, March.
  2. Ke Li & Jan Whitwell & Shuntian Yao, 2005. "A Growth Model For China'S Special Economic Zone," Pacific Economic Review, Wiley Blackwell, vol. 10(4), pages 439-449, December.
  3. Beladi, H. & Marjit, S., 1992. "Foreign Capital and Protectionism," RCER Working Papers 310, University of Rochester - Center for Economic Research (RCER).
  4. Ge, Wei, 1999. "Special Economic Zones and the Opening of the Chinese Economy: Some Lessons for Economic Liberalization," World Development, Elsevier, vol. 27(7), pages 1267-1285, July.
  5. Beladi, Hamid & Naqvi, Nadeem, 1988. "Urban unemployment and non-immiserizing growth," Journal of Development Economics, Elsevier, vol. 28(3), pages 365-376, May.
  6. Bontempi, Maria Elena & Prodi, Giorgio, 2009. "Entry strategies into China: The choice between Joint Ventures and Wholly Foreign-Owned Enterprises: An application to the Italian manufacturing sector," International Review of Economics & Finance, Elsevier, vol. 18(1), pages 11-19, January.
  7. Yabuuchi, Shigemi, 2000. "Export Processing Zones, Backward Linkages, and Variable Returns to Scale," Review of Development Economics, Wiley Blackwell, vol. 4(3), pages 268-78, October.
  8. Devereux, John & Chen, Lein Lein, 1995. "Export Zones and Welfare: Another Look," Oxford Economic Papers, Oxford University Press, vol. 47(4), pages 704-13, October.
  9. Miyagiwa, Kaz F., 1986. "A reconsideration of the welfare economics of a free-trade zone," Journal of International Economics, Elsevier, vol. 21(3-4), pages 337-350, November.
  10. Miyagiwa, Kaz, 1993. "The locational choice for free-trade zones : Rural versus urban options," Journal of Development Economics, Elsevier, vol. 40(1), pages 187-203, February.
  11. Gleason, Kimberly C. & Lee, Chun I & Mathur, Ike, 2002. "Dimensions of international expansions by US firms to China: Wealth effects, mode selection, and firm-specific factors," International Review of Economics & Finance, Elsevier, vol. 11(2), pages 139-154, May.
  12. Albert G. Schweinberger, 2003. "Special Economic Zones in Developing and/or Transition Economies: a Policy Proposal," Review of International Economics, Wiley Blackwell, vol. 11(4), pages 619-629, 09.
  13. Hamada, Koichi, 1974. "An economic analysis of the duty-free zone," Journal of International Economics, Elsevier, vol. 4(3), pages 225-241, August.
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Cited by:
  1. Dwibedi, Jayanta & Chaudhuri, Sarbajit, 2011. "Poverty alleviation programs, FDI-led growth and child labour under agricultural dualism," MPRA Paper 29997, University Library of Munich, Germany.
  2. Chaudhuri, Sarbajit, 2010. "Economic recession, demand constraint and labour markets in a developing economy," MPRA Paper 27433, University Library of Munich, Germany.
  3. Soumyatanu Mukherjee, . "Labour Market Entry and Earnings: Evidence from Tanzanian Retrospective Data," Discussion Papers 13/07, University of Nottingham, CREDIT.

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