Brief History of SEZs and Overview of Policy Debates
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Box 2.2
Masan Free Zone, Republic of Korea Created in 1970, the Masan Free Zone became the prototypical export processing zone. Initially, It was called the Masan Free Export Zone and was primarily dedicated to attracting FDI in manufacturing export activities. The objective in creating Masan FEZ was to support the development of manufacturing activities that complemented those of the Korean economy but did not compete with them. Thus, investment was constrained by qualification criteria, and the zone was kept relatively small—originally 10 hectares, expanded to 90 hectares. It offered a prime investment and operating environment to qualifying enterprises, including excellent external infrastructure (port, airport, roads) and a high-quality industrial park with solid management and support services. Masan’s small size did not detract from its economic impact, which has been significant. It attracted prime foreign enterprises in the electronics industry. In 1971, these enterprises “imported” only 3 percent of their production components from Korea; by 1986, 45 percent of these components were sourced from Korea. The zone achieved one of its crucial objectives: serving as a catalyst for economic diversification through the creation of national competitive clusters in high-value manufacturing. Masan was restructured in 2000 to reflect the liberalized global and domestic economic environment. Source: http://www.ftz.go.kr/eng/main.jsp, accessed in May 2010.
locate in an existing FTZ. Some countries have no FZs/EPZs per se, and the FZ/EPZ status is given to individual enterprises. In Mexico, the maquiladora status is of this type; for many years, it was geographically restricted to a band along the Mexico-U.S. border. 4. Freeports: The term freeport in the FIAS (2008) classification can be confusing, as it is used to describe what are generally known as special economic zones. In this classification, the Aqaba Special Economic Zone and the Chinese SEZs would be freeports. These freeports are the largest type of all, as they encompass very large portions of the territory, include urban and rural areas, and incorporate large transport facilities such as ports and airports. Freeports can include entire economic regions, the populations that live and work in these regions, and all the economic activities that take place there. They can contain or even overlap political and administrative units.