1. Introduction
Special economic zones (SEZs) have played an important role
in advancing economic reform in the People's Republic of
China (PRC) and, particularly, in opening up its economy to the
rest of the world. The Shenzhen SEZ was the first SEZ to be set
up in the PRC. Over the past few decades, Shenzhen has
developed from being a small fishing village in Guangdong
Province into a major industrial and financial center, benefiting
substantially from the liberal economic policies granted by the
Central Government to SEZs. Shenzhen's rapid development
has showcased the advantages of “open door” policies and
market-oriented reforms, served as a “laboratory” for piloting
policies, and propelled economic development in the rest of
the country.
This policy note briefly documents the experience of Shenzhen
and analyzes the factors that have contributed to its
emergence as a successful SEZ. There are useful lessons to
be drawn from Shenzhen's experience by countries such as
Pakistan in designing their economic reform policies. The
major findings of this policy brief are summarized below.
The experience of Shenzhen has demonstrated the important
differences between a “special economic zone” and an
“industrial/high-tech park.” A SEZ is a comprehensive
laboratory in which fully fledged economic reforms can be piloted, while industrial parks are a supporting component of
SEZs, but with an industrial focus. SEZs in the PRC are
authorized by the Central Government and cover large
administrative areas such as an entire province or a city. In
contrast, industrial parks are authorized by provincial and
municipal governments, and generally encompass only part of
a city. There are over 1,500 industrial parks in the PRC, but only
7 SEZs. In this sense, few countries in the world have SEZs,
while most have industrial parks. Too often policies of setting
up isolated industrial parks lead to the development of
enclaves which are unable to propel...