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Impact of Special Economic Zones on Employment, Poverty and Human Development


  • Aradhna Aggarwal



There are three channels through which SEZs address these issues: employment generation, skill formation (human capital development), and technology and knowledge upgradation. It examines how the impact of SEZs is passed through each of these channels. ‘Employment generation’ has been the most important channel through which SEZs lend themselves to human development concerns, in India. Employment generated by zones is remunerative. Wage rates are not lower than those prevailing outside the zones. Besides, working conditions, non monetary benefits (such as transport, health and food facilities), incentive packages and social security systems are better than those prevailing outside the zones, in particular, in the small/informal sector. The role of SEZs in human capital formation and technology upgradation is found to be rather limited. The zones’ potential could not be exploited fully in India. This could primarily be attributed to the limited success of SEZs in attracting investment and promoting exports. The new SEZ policy gives a major thrust to SEZs. However the creation of SEZs alone does not ensure the realization of their potential. The government will need to play a more proactive role for effective realization of the full range of benefits from SEZs [ICRIER WP No. 194].

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  • Aradhna Aggarwal, 2007. "Impact of Special Economic Zones on Employment, Poverty and Human Development," Working Papers id:1111, eSocialSciences.
  • Handle: RePEc:ess:wpaper:id:1111 Note: Institutional Papers

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    References listed on IDEAS

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    Cited by:

    1. Triyakshana Seshadri & Virgil Storr, 2010. "Knowledge problems associated with creating export zones," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 23(4), pages 347-366, December.
    2. Zheng, Guo & Barbieri, Elisa & Di Tommaso, Marco R. & Zhang, Lei, 2016. "Development zones and local economic growth: zooming in on the Chinese case," China Economic Review, Elsevier, vol. 38(C), pages 238-249.
    3. Anwar Mohammad Amir, 2014. "New modes of industrial manufacturing: India’s experience with special economic zones," Bulletin of Geography. Socio-economic Series, De Gruyter Open, vol. 24(24), pages 1-19, June.
    4. Farrukh Nawaz Kayani & Saquib Yusaf Janjua & Babar Wasim, 2013. "Myths and Realities of Innovative China the Case of Haier Company," Business and Economic Research, Macrothink Institute, vol. 3(2), pages 107-114, December.
    5. Agnieszka Konopelko, 2013. "Suwalki Special Economic Zone as an example of co-operation of local government and business for regional development," Ekonomia i Prawo, Uniwersytet Mikolaja Kopernika, vol. 12(1), pages 139-150, March.
    6. World Bank, 2010. "Mauritania - Policy Options to Enhance Private Sector Development : Country Economic Memorandum," World Bank Other Operational Studies 2858, The World Bank.
    7. Preet Rustagi & Dev Nathan & Amrita Datta, 2015. "Women and Work in South Asia: Changes and Challenges," Working Papers id:6908, eSocialSciences.
    8. Marta Castilho & Marta Menéndez & Aude Sztulman, 2015. "Poverty and Inequality Dynamics in Manaus: Legacy of a Free Trade Zone?," Working Papers halshs-01245394, HAL.
    9. Elisa Barbieri & Chiara Pollio, 2015. "Industrial Development and manufacturing in Chinese territories: the contribution of special economic enclaves policies," Working Papers 1501, c.MET-05 - Centro Interuniversitario di Economia Applicata alle Politiche per L'industria, lo Sviluppo locale e l'Internazionalizzazione, revised Jan 2015.

    More about this item


    Special Economic Zones; Human Development; Employment; Poverty; Skill Formation; Technology Transfers; Local R&D;

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D


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