Special economic zones (SEZs) in Southern African Development Community (SADC)

Abstract

There have been calls on Southern African Development Community (SADC) governments to device strategies to boost economic growth, structural and infrastructural development. Economists have been recommending that Foreign Direct Investment (FDI) would foster long term economic growth rather than borrowing from multilateral institutions, hence Special Economic Zones (SEZs) have been established to attract investments. However, there have been arguments against SEZs on the net benefit accruing to the host nation from SEZs. This study applied the Ordinary Least Squares (OLS) on 15 SADC member countries’ SEZs profit remittance data and draw a multi-linear regression model to establish the relationship between national income and FDI. The results show that there is a not significant relationship between these variables. Hence there is no net benefit accruing to the host country by establishing SEZs. However long-term benefits may be realised if the companies operating in these zones construct infrastructures and other structural developments.