What is the role of Special Economic Zones in the Jamaican economy?
Special Economic Zones (SEZ) are “geographically designated trade areas that are used to attract foreign investors and boost industrialisation. They generally have trade laws that differ from the rest of the country, and companies are offered tax incentives to set up operations” (‘What can Africa learn from China’s special economic zones?’ by Yejoo Kim, World Economic Forum). SEZs come in a variety of forms, names and functions but are used as developmental tools by governments to attract and facilitate investments that act as catalysts to diversify whole or targeted segments of their economies.
Linkages with the local economy
The seamless integration of the local economy with SEZs is critical for achieving developmental objects of SEZs. What is more SEZ programmes have proven to be unsustainable in the long term without such integration. In re-design of its Zone programme (Free Zone to SEZ) the Government of Jamaica has taken the deliberate policy decision not create enclaves characteristic of traditional free zones, but to have SEZs act as catalysts for growth and development of the overall economy through programmes that create backward and forward linkages with the rest of the economy.
SEZ are a critical part of Jamaica’s growth agenda. The Jamaica Special Economic Zone Authority (JSEZA) was created to foster investments in Jamaica’s “Special Economic Zones – where globally competitive firms thrive, driving unprecedented growth and development for all in a logistics-centred Jamaican economy.” The SEZs are a major policy tool being used to connect Jamaica to the the world. As such SEZs should be viewed as export platforms for local businesses that facilitate the reduction of the associated logistics, transport and administrative costs of trading across borders. The SEZs while physically located in Jamaica are an ‘international space’ and are a captive export market for local producers to engage global value chains without leaving the geographic boundaries of Jamaica.
SEZ linkages ecosystem
There are many opportunities for linkages between the SEZ and the local in economy in Jamaica. The linkages architecture is best thought of as an ecosystem. An ecosystem of opportunity.
The linkages architecture between the SEZ and the local in economy in Jamaica is best thought of as an ecosystem. An ecosystem of opportunity. Click To TweetHowever, as was noted in an article I wrote: China’s Special Economic Zone experience… seven things Jamaica has learnt lesson 6 was that:
The phrase a rising tide lifts all boats defiantly describes the economic benefits of China’s SEZ development, however, this rising tide was not incidental and was planned for. One of the great development effects of SEZs are their spill-over effects into the rest of the economy. However, for these impacts to be meaningful and sustainable forward and backward linkages have to be forged by deliberate policy direction and actions. Jamaica’s SEZ policy and law recognize this fact and have created several mechanisms, particularly aimed at small businesses, to accomplish this.
The emerging ecosystem
The diagrams below demonstrate some of this ecosystem that is emerging in Jamaica between its SEZs and its local economy.
Advanced manufacturing linkages
Connecting the dots
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