Policy Reforms in Public Institutions to Regulate SEZ under CPEC: A Learning Example from Africa

Structuring Special Economic Zones (SEZs) under China Pakistan Economic Corridor (CPEC) is an insightful initiative for a fast-track industrial development and to bolster the stagnated economy of Pakistan. Implementing effective SEZs is possible by an approach of replicating the success stories and learning lessons from the failure causes of SEZs around the globe. This paper focuses on a conscientious political economy framework in terms of policy making, planning and strategy, regulatory scheme, administrative and management structure which is prerequisite for a successful functioning of SEZs in Pakistan. The literature reveals that transparency in the components of political institutions and consistency of good governance is obligatory to move ahead on the avenue of success whereas flaws in governance structure can provide grounds to obstruct SEZs development and prevent replication of best practices, as example of African SEZs is evident in this case. To analyze and attain appropriate findings a recent technique, Autoregressive Distributed Lag Model (ARDL) has been employed which captures the long-run and short-run relationships between the variable of interests. Figuring out the prior and prevailing performance of political institutions in Pakistan and answering the question ‘what Pakistan can grasp from the root causes behind the failure of African SEZs’ is crucial so that appropriate policies can be designed to overcome the challenges in flourishing the SEZs under CPEC.