Glossary term
Special Economic Zone (SEZ): Meaning and Definition
Reviewed and approved by Dr. Anamika ShrivastavaPublished Last updated
A special economic zone (SEZ) is a geographically defined area in which businesses operate under special economic laws that are more liberal than those of the rest of the country, including tax concessions, simplified procedures and better infrastructure. SEZs aim to attract foreign investment and boost exports and jobs.
In more detail
SEZs concentrate infrastructure, such as power and ports, in one place so firms can start quickly. Supporters credit them with export growth and employment. Critics point to lost tax revenue, acquisition of farmland and limited links with the local economy. Their results differ greatly by country and location.
Example
China set up its first SEZs, such as Shenzhen, in 1980. India’s Special Economic Zones Act was passed in 2005.
Key points
- Tax and duty benefits for units.
- Meant for export-oriented production.
- Used by China to attract foreign investors.
Common mistake
Treating SEZs as areas outside the country’s laws.
Related terms
Where it is explained
This term is explained in Class 11 Indian Economic Development Chapter 10: Comparative Development Experiences.