The Political Economy of Special Economic Zones in India

Triyakshana Seshadri

Advisor: Dr. Peter J. Boettke

Committee Members: Dr. Richard E. Wagner, Dr. Virgil H. Storr, Mercatus Center

April 22, 2011, 10:30 AM to 11:00 AM


My doctoral research focuses on the economic incentives created by export zone policies and rules in India. I use qualitative and quantitative measures to analyze the impact of export zone-based development policies towards promoting exports, and generating entrepreneurial activity in India. The questions I set out to answer in my dissertation are the following: Have export zones caused export growth in India? What is the fundamental reason for the lack-lustre performance of Indian zones? What are the primary objectives of the new Special Economic Zone policy and are they being achieved?The first chapter analyzes the effectiveness of zone policies towards promoting exports, using data on exports, both from the zones and outside, and concludes that general trade-reforms rather than zone policies have lead export growth in India. The second chapter analyses the knowledge problem with developing export zones in India and concludes that one of the primary reasons export zones in India failed to perform better was the knowledge problem, inherent in centrally planned economies, that prevented better location of these zones and their success. The third chapter looks at the political economy of developing big area private enclaves, and argues that private sector development of big zones is not possible with existing land acquisition policies in India.