| Special Economic Zones (SEZs) are specific | | | | Korea ( more attractive in the eyes of foreign |
| geographical regions that have economic laws | | | | investors and to draw them to the country. |
| different from and more liberal than a country's | | | | The project includes a technology complex to |
| typical economic laws. The goal is usually an | | | | house research centers and venture start-ups |
| increase in foreign direct investment (FDI) in the | | | | alongside the Korean Institute of Technology. Two |
| country. | | | | more complexes, for biotechnology and for |
| There is a clear understanding that a | | | | knowledge and information will be built by 2008. |
| well-implemented and designed SEZ can bring | | | | These projects, which have high-level political |
| about many desired benefits for a host-country: | | | | backing, are supported by a package of generous |
| increases in employment, FDI attraction, general | | | | financial incentives. Other incentives include |
| economic growth, foreign exchange earnings, | | | | simplified administrative procedures, heavily |
| international exposure, and the transfer of new | | | | subsidized land leases on government owned land, |
| technologies and skills. Hence, many developing | | | | tax breaks and linguistic support. |
| countries are also developing the SEZs with the | | | | Situated directly between Japan and China, South |
| expectation that they will provide the engines of | | | | Korea is at the centre of a vast Asian market |
| growth for their economies to achieve | | | | with a total population of two billion, including 500 |
| industrialization. But for this to be successful their | | | | million in the ASEAN (Association of Southeast |
| governments need to enact legislation, create a | | | | Asian Nations) countries, with which, along with |
| focused administrative infrastructure to govern | | | | China and Japan, Korea enjoys a special |
| special economic zones, offer highly attractive | | | | commitment to economic cooperation. North-east |
| incentives and locate zones in the best possible | | | | Asia alone accounts for about 24% of the |
| locations. Overall investment climate | | | | world’s population and 19% of global |
| (infrastructure, governance) in a country matters | | | | production. |
| in the success of its special economic zones in | | | | South Korea's gateway strategy is designed to |
| terms of competitiveness. | | | | leverage its geographic and geocultural advantages |
| One of the earliest and the most famous Special | | | | while offering a new, friendly business face to |
| Economic Zones were founded by the | | | | potential investors in the form of SEZs in the |
| government of the People's Republic of China | | | | southern part of the peninsula. Foreigners, foreign |
| under Deng Xiaoping in the early 1980s. The most | | | | companies, and international economic |
| successful Special Economic Zone in China, | | | | organizations can be involved in free corporate |
| Shenzhen, has developed from a small village into | | | | activities in these economic zones offering a |
| a city with a population over 10 million within 20 | | | | range of special advantages, including tax, labor, |
| years. Following the Chinese examples, Special | | | | regulatory and other incentives. |
| Economic Zones have been established in several | | | | South Korea is a cheaper location than Japan and |
| other countries. | | | | more straightforward from a regulatory point of |
| In the face of fierce regional competition, South | | | | view than China, having opened its markets |
| Korea is also showing strong economic | | | | decades ago. |
| performance and can boast a highly skilled labor | | | | Generally, it is argued that the special economic |
| force. It has started working strategically towards | | | | zone concept is attractive because it is much |
| attracting investment, including the establishment | | | | easier to resolve the problems of infrastructure |
| of its first special economic zone, called The | | | | and governance on a limited geographical area |
| Incheon Special Economic Zone and so look set to | | | | than it is to resolve them countrywide. Such |
| transform the country into a regional hub from | | | | economic zones cannot be insulated from the |
| which foreign companies can expand into other | | | | broader institutional and economic context of the |
| parts of Asia. | | | | country and be treated as an economy within the |
| The Incheon special economic zone in the north | | | | economy. Zones are a part of the economy and |
| revolves around the international airport, the | | | | require overall improvement in the investment |
| creation of an international financial services | | | | climate to ensure success in the long run. They |
| district and Songdo’s “intelligent city”, | | | | should not, therefore, be viewed as an alternative |
| which will include a 60-storey world trade centre, | | | | to the overall development model. This is perhaps |
| 60 office buildings, deluxe hotels, shopping malls | | | | the reason why SEZs failed to fulfill the role of |
| and a golf course, due to be completed by 2008. | | | | engines of industrialization in most countries on a |
| These economic zones are a strategy to make | | | | sustainable basis. |