Embedded Enclaves? Initial Implications of Development of Special Economic Zones in Myanmar

Abstract

Special economic zones (SEZs) are geographically delimited areas in a country that are subject to differing business rules as otherwise applicable in the national territory. This study discusses the role of SEZs in the economic policy of Myanmar. Despite the fact that SEZs are often perceived as enclaves of industry having little effect on the national economic landscape, their success in practice depends to a large extent on their interdependence with the surrounding economy. Therefore, the purpose of this study is to initially apply the embeddedness concept to SEZs and therewith attempt to discuss probable implications of SEZs. The development of SEZs entails a number of weaknesses when assessed on their ability to enhance economic development, mainly because the quality of employment opportunities created is low and the quality of sustainable and lasting development, in general, is questionable. Although initial findings suggest that Thilawa SEZ, one of the three planned zones and currently the only one being in operation in Myanmar, has made some positive attempts to create jobs, transfer knowledge, and strengthen the country’s industrial infrastructure, there are some limits to positive external benefits flowing from SEZs in general. It is argued that consideration of the embeddedness concept proves helpful in gaining a more nuanced understanding of the interlinkage processes involved. More importantly, despite the perception of SEZs as enclaves, the specifics of their embeddedness reveal numerous directions for future research. These findings have important policy implications for Myanmar’s attempt at bringing about structural change and enhanced economic development.