ADB Advices Asian Nations to Increase Special Economic Zones

An increase in the number of special economic zones (SEZs), or geographically designated trade areas, can help Asia revitalize its economy amid a protracted trade slowdown, according to the Asian Development Bank (ADB).

“According to estimations conducted on Asian economies, the number and presence of SEZs in an economy is positively related to overall export performance and volume of inward foreign direct investment (FDI),” the organization said in a new report on Tuesday.

On average, a 10 percent increase in the number of SEZs increases manufacturing exports by 1.1 percent, the report found.

From an estimated 500 SEZs in 1995, the region now boasts 4,300 spread out over 130 countries but the ADB wants that number to increase as Asian trade growth lags behind overall economic output. Intermediate goods [i.e. semi-finished products], which makes up almost 60 percent of overall trade, declined 2.6 percent in value last year while the region’s gross domestic product expanded over 5 percent during the same period.

While the 1.1 percent export boost may seem small, the benefit of increased SEZs lies in the bigger picture.

via CNBC

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