SEZs and Foreign Investment in China: Experience and Lessons for North Korean Development

This article analyzes how China succeeded in creating special economic zones (SEZs) and “opening to the outside world.” Prudent choice over zone location and leadership, institutional arrangements, and local initiatives combined to produce the success of SEZs. China’s SEZs, especially the largest and earliest Shenzhen SEZ, have taken off because of their proximity to and easy connections with neighboring advanced economies, liberal initiatives by able local leadership, administrative and economic arrangements for reform, and a progressive national-opening strategy. In addition, economic freedom at home and peaceful external relations were also necessary for smooth marketization and opening. This lesson may be enlightening for North Korea should it promote SEZs and open up its economy.