Political Economy of Special Economic Zones under CPEC in Pakistan: Prospects and Challenges

Abstract

Many economic experts consider the establishment of Special Economic Zones (SEZs) a vehicle to rapid industrial growth in developing countries. In the age of connecting economies, most of the developed countries of the world are following the approach of SEZs to achieve the goals of sustainable development. However, the results of SEZs vary from country to country due to their respective political, administrative and regulatory policies. Basically, the SEZs are special delimited areas, mostly located in the vicinity of the border areas, wherein the business rules are kept relaxed as compared to the rest of the country to attract the foreign as well as local investment. Pakistan intends to establish around 40 SEZs under the mega project of CPEC. The State seems to be committed in introducing administrative, political and economic reforms to provide the conducive environment for the business activities in these zones. The impetus behind the establishment of the SEZs is that these zones would accelerate the process of industrialization, create job opportunities for Pakistanis, attract Foreign Direct Investment, increase the volume of export and consequently enhance the economic growth of the country. This paper will critically analyze the following research questions: How the establishment of SEZs under CPEC is crucial for the economic development of Pakistan? What is the expected role of state to make these SEZs a success story? What challenges and risks are involved in establishing the SEZs in Pakistan?