social cost benefit analysis of China’s Shenzhen special economic zone英文文献.pdfVIP

Social Cost-Benefit Analysis of China’s Shenzhen Special Economic Zone Jinghan Chen* Over the last two decades, many developing countries have established export processing zones (EPZs) with the aims of promoting exports, attracting foreign capital, creating employment opportunities and promoting regional development. An EPZ is defined by the United Nations Industrial Development Organisation as an area involved in the establishment of modern manufacturingplants inside an industrial estate, by offering a suitable package of investment incentives to bothforeign and domestic entrepreneurs. Such incentives include: exemption from corporate tax for a fixed term, customs duties on machinery imported for production, and export duties; freedom to repatriate profits at a pre-specified rate; and the provision of other infrastructure facilities including water, electricity and land and buildings at relatively low prices. Since embarking on the open door policy in 1979, China has set up five EPZs, referred to as Special Economic Zones (SEZs) because the rules and regulations governing the operation of firms in the zones are different from those in the rest of the country. These SEZs have achieved many of the purposes for which they were founded, such as earning revenue and foreign exchange and creatingjobs. It should be noted, however, that the government has made substantial investments in infrastructure and provided a variety of subsidies and tax concessions to the firms in the zones. Does the contribution of the SEZs to the economy justify these investments? In other words, do the returns match the opportunity costs? Or could the resources have been better utilised elsewhere in the economy? Among the five SEZs, the Shenzhen SEZ is the oldest and the most