5 Years of Thailand’s Special Economic Development Zones: A failure to create development?

Abstract

During the last few decades, many developing countries have established Special Economic Zones (SEZs) to attract foreign direct investment and help facilitate international trade. Thailand has embraced this development feature by establishing ten SEZs across the country aimed to resuscitate the economy, with a focus on high value-added industries. The purpose of this paper is to review this development strategy, with a focus on investment and local economic development. Despite investment incentive and administrative services, these SEZs fail to attract new investor and generate economic growth. Developmental outcomes in these zones are not significantly greater than the rest of the economy. I argue that this is because most of targeted industries are not in line with Thailand’s current comparative advantage, which can hinder opportunity to reap dynamic gain from trade in the era of global value chain. The upshot is that this paper calls for redesigning the SEZs to be consistent with country’s stage of economic development.