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Special Economic Zones and Growth in Bangladesh

Geoff Riley

21st December 2016

Few countries in recent times have given more attention to setting up special economic zones than Bangladesh.

Special economic zones are geographically delineated areas set up by a government offering tax incentives in a bid to attract inward investment and new jobs.

The Bangladeshi government latest five-year plan has a target of attracting $9.56 billion foreign investment in 2020 and special zones are a key part of the policy mix aimed at reaching this objective.

SEZs are seen as an important contributor to increasing the capital stock, raising labour productivity, increasing the country's supply-side capacity and expanding formal employment and lifting tax revenues.

According to a new report from the Asian Development Bank (ADB)

"In 2014, Bangladesh had only eight special economic zones (known as export processing zones) that facilitate exports compared to 14 in Cambodia, 199 in India, 10 in Kazakhstan, 1,475 in China, 312 in the Philippines and 12 in Sri Lanka."

The government plans to make Bangladesh a middle-income country by 2021 and a developed nation by 2041.

Special Zones are not without their critics - especially in when land is earmarked/grabbed by state authorities for development that has been used by communities for generations to grow their own crops. Private sector investment from MNCs carries risks as well as opportunities. In November 2015 the ADB produced a more detailed report on the growth and development impact of special economic zones - available here

Geoff Riley

Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.

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