The Political Economy of Special Economic Zones, by Lotta Moberg

by on March 22, 2017 at 1:45 pm in Books, Economics, Political Science | Permalink

Here is part of the book summary:

This book examines SEZs from a political economy perspective, both to dissect the incentives of governments, zone developers, and exporters, and to uncover both the hidden costs and untapped potential of zone policies. Costs include misallocated resources, the encouragement of rent-seeking, and distraction of policy-makers from more effective reforms. However, the zones also have several unappreciated benefits. They can change the politics of a country, by generating a transition from a system of rent-seeking to one of liberalized open markets. In revealing the hidden promise of SEZs, this book shows how the SEZ model of development can succeed in the future.

Here is my blurb:

‘What do Special Economic Zones actually accomplish? And what are their drawbacks and limitations? Lotta Moberg’s The Political Economy of Special Enterprise Zones mixes theory and empirics to offer the very best available answers to these questions.’ ― Tyler Cowen, Professor of Economics, George Mason University, USA

Here is Lotta Moberg’s home page.  Here is a related article of hers on special economic zones.  Here is the Amazon link.

1 prior_test2 March 22, 2017 at 2:29 pm

‘They can change the politics of a country’

Well, Hong Kong certainly illustrates that – in 1842.

2 So Much For Subtlety March 22, 2017 at 7:18 pm

I don’t see that Hong Kong changed the politics of China one little bit. Shanghai might have but Hong Kong didn’t. How are you making this particularly historically illiterate claim?

What is more China is infinitely better off because of Hong Kong and the other foreign settlements. Apart from their unfortunate role in giving shelter to the Communist Party. Ask anyone from China if they would have preferred the British to have taken a rock next to their home town and see what their response is.

That is probably why Deng Xiaoping could think of no economic policy except bringing back the Treaty Port days by opening up SEZ in pretty much the same treaty ports. Seems to be working for China.

3 Troll me March 25, 2017 at 3:32 pm

Shenzhen was the SEZ, not Hong Kong. Of course, it’s value as an SEZ was strongly linked to its proximity to HK …

4 Daniel March 22, 2017 at 2:36 pm

Too late to fix the typo in the blurb? Amazon should be able to fix it on their website at least.

5 Ray Lopez March 22, 2017 at 3:24 pm

I don’t think people should comment just for the sake of commenting. This area is for specialists. From the abstract of Moberg’s paper (below), I think the narrative is: “SEZs are like tax breaks, they can do good or evil. In China’s case they did good, in India’s case they did evil”. I guess you can say the same about the Kemp-Roth 30% tax cut (https://en.wikipedia.org/wiki/Economic_Recovery_Tax_Act_of_1981) it did good to roll back government (actually US Fed govt stabilized in the 1980s after climbing as share of GDP since WWII, but state and local governments expanded; today, roughly half your taxes go to DC and half go to your local government), but bad because long term the federal government simply borrowed more to make up the revenue shortfall.- RL

Moberg: This paper is a first attempt to apply a robust political economy framework to explain when Special Economic Zones (SEZs) can contribute to economic development. A robust political economy is one that channels the actions of self-interested individuals with limited information to promote economic progress. In the right institutional context, SEZs tend to promote economic growth. In the wrong institutional context, they can cause resource misallocation and rent-seeking.

6 prior_test2 March 22, 2017 at 3:31 pm

‘In China’s case they did good’

1842 Ray, 1842. The Chinese most certainly did not think it did them good at the time. It isn’t as if the history of SEZs doesn’t stretch back for quite a while.

7 Ray Lopez March 22, 2017 at 4:13 pm

Sorry, I was referring to modern China of post-Deng. Btw, off-topic a bit, I saw an interesting book review along the lines of John Darwin’s The Empire Project that argued the UK Opium Wars vs China were not really the work of the UK trying to sell opium, but more complicated. You might recall Darwin’s thesis that the UK was a reluctant imperialist. White Man’s Burden. T or F? Probably somewhat true.

8 Thor March 22, 2017 at 8:29 pm

His books are always good. Long but carefully argued.

9 Troll me March 25, 2017 at 3:35 pm

Well, it must have been quite traumatic on the ruling class of China for the domestic merchants to be forced to have the freedom to trade externally.

Was China brought to its knees in a profound national embrassment, or were they merely forced (in some handful of ports) to allow domestic merchants who wanted to trade with Europeans to do so?

10 Bill March 22, 2017 at 4:04 pm

I have established my own

Special Economic Zone here in Mar a Largo

And

Ask you to pay for it

Because

I plan to hire my wife, employ my children and their spouses

To Make

America Great Again.

11 mulp March 22, 2017 at 4:22 pm

Coal country has for decades been a “special economic zone” and Trump has promised to restore it’s status with new SEZ policies, and coal County has over the decades gone from a labor power economy to a rent seeking zone, and Trump is promising that cutting labor cost mandates (costly regulations) to increase rents will revitalize coal country..

Where are the SEZs where regulations mandate much higher labor costs to create more jobs per unit of production eliminating rent seeking?

Ie, why is manufacturing solar and wind and batteries which require huge input of labor and high labor cost capital assets not favored by SEZ advocates on the right? Economic profits and rents are basically zero in these labor favored zones.

Elon Musk won SEZ status for two Gigafactory’s, yet I don’t see the advocates of SEZs calling for more SEZs of the scale of these. He also has put back to use an old SEZ factory that had been abandoned by GM and Honda in favor of job and wage killing SEZ in the anti union South. He also is building in a Federal SEZ created to privatize part of NASA as well as creating a new SEZ in the most south part of Texas. In the latter, he’s competing against existing rocket companies by selling rocket services at half the price, at zero economic profit. And conservatives claim he’s only not making profit instead of going totally bankrupt because of all the taxpayer welfare given to SEZs.

On the other hand, Federal mining lease SEZs that generate high profits to EXXON, et al, are highly praised by conservatives. But oil and gas production on private land are viewed very negatively because the high labor costs of production are so high that businesses go bankrupt.

12 Brad March 22, 2017 at 5:22 pm

$112… any discounts available?

13 Mark Thorson March 22, 2017 at 5:34 pm

Is Lotta Moberg a real name?

14 Viking March 22, 2017 at 7:57 pm

Moberg is a typical Scandinavian surname like yours, and Lotta is a typical Swedish first name.

15 So Much For Subtlety March 22, 2017 at 7:10 pm

The real question is why are Routledge books so consistently so expensive? How can they justify those prices?

Sensible people ought to boycott.

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