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Special economic zones and liberalization avalanches

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  • Lotta Moberg
  • Vlad Tarko

Abstract

Purpose - The purpose of this study is to show under what conditions a special economic zone will succeed at spurring development and at sparking broader liberalization. Design/methodology/approach - The authors use a combination of formal modeling and case studies. Findings - Most special economic zones fail because of rent-seeking. Successful zones create positive economic and political externalities to other regions. Credible reforms are associated with turning the opposition to the zones into supporters, as a consequence to the positive externalities. Originality/value - The authors add heterogeneity to the model of political elite dynamics, which leads to significant enhancements of the model and removes the pro-centralization bias of the Blanchard and Shleifer's (2001) model. They also criticize Weingast's federalism model as applied to China. Success of China is explained by a different mechanism, which we put forth in this paper.

Suggested Citation

  • Lotta Moberg & Vlad Tarko, 2021. "Special economic zones and liberalization avalanches," Journal of Entrepreneurship and Public Policy, Emerald Group Publishing Limited, vol. 10(1), pages 120-139, February.
    • Handle: RePEc:eme:jepppp:jepp-01-2021-0008
    DOI: 10.1108/JEPP-01-2021-0008
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    References listed on IDEAS

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    1. Litwack, John M. & Qian, Yingyi, 1998. "Balanced or Unbalanced Development: Special Economic Zones as Catalysts for Transition," Journal of Comparative Economics, Elsevier, vol. 26(1), pages 117-141, March.
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    5. Arthur Benz, 0. "From Unitary to Asymmetric Federalism in Germany: Taking Stock after 50 Years," Publius: The Journal of Federalism, CSF Associates Inc., vol. 29(4), pages 55-78.
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    7. Gokhan Akinci & Thomas Farole, 2011. "Special Economic Zones : Progress, Emerging Challenges, and Future Directions," World Bank Publications - Books, The World Bank Group, number 2341, August.
    8. Paul Aligica & Vlad Tarko, 2012. "State capitalism and the rent-seeking conjecture," Constitutional Political Economy, Springer, vol. 23(4), pages 357-379, December.
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    Cited by:

    1. Kutin-Mensah Florence & Dechun Huang & Boateng Ofosu Richard & Chiponga Rutendo, 2017. "Has the Special Economic Zone Approach Improve Ghana¡¯s Competitiveness in the Global Market?," Business and Economic Research, Macrothink Institute, vol. 7(2), pages 19-34, December.
    2. Sagari R. Ramdas, 2021. "Towards Food Sovereignty: Dismantling the Capitalist Brahminic-Patriarchal Food Farming Regime," Development, Palgrave Macmillan;Society for International Deveopment, vol. 64(3), pages 276-281, December.
    3. Diana W. Thomas & Michael D. Thomas, 2022. "Regulation, competition, and the social control of business," Public Choice, Springer, vol. 193(1), pages 109-125, October.

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