For some time now, the global policy climate for trade and investment has not been as benign as it was in
the heyday of export-led growth and development. Yet the need to attract investment and promote exports
to support industrialization, economic diversication and structural transformation is as great as ever for
developing countries, especially the least developed countries.
The many new industrial policies that have been adopted in recent years – in both developing and developed
countries – almost all rely to a signicant degree on attracting investment. At the same time, we are observing
a declining trend in cross-border productive investment.
The market for internationally mobile investment in industrial capacity is thus becoming increasingly difcult and
competitive. The demand for investment is as strong as ever, the supply is dwindling and the marketplace is
less friendly then before.
It is in this context that we are seeing explosive growth in the use of special economic zones (SEZs) as key
policy instruments for the attraction of investment for industrial development. More than 1,000 have been
developed worldwide in the last ve years, and by UNCTAD’s count at least 500 more are in the pipeline for
the coming years.
There are many examples of SEZs that have played a key role in structural transformation, in promoting greater
participation in global value chains and in catalyzing industrial upgrading. But for every success story there are
multiple zones that did not attract the anticipated inux of investors, with some having become costly failures.
In countries with an SEZ portfolio or with ambitious SEZ development programmes, policymakers and
practitioners – in ministries responsible for industry, trade and investment; in SEZ authorities; and in export and
investment promotion agencies, to mention a few – are looking to turn around underperforming zones and to
ensure that new ones meet expectations.
In doing so, they not only have to contend with the challenges associated with a more difcult trade and
investment climate. They face other challenges as well. One is the new industrial revolution, which could erode
the importance of low labour costs, the traditional competitive edge of most SEZs. SEZs will need to anticipate
trends in their targeted industries and adapt.
But even more important is that, today, sustainable development – as embodied in the UN Sustainable
Development Goals – must guide SEZ strategy and operations. In a break from the past, adopting the highest
social, environmental and governance standards for zones is becoming a competitive advantage.
The World Investment Report 2019 surveys the universe of SEZs today, provides an overview of SEZ laws and
regulations, and assesses the sustainable development impact of SEZs. The report offers recommendations
through three lenses: lessons learned from the past, a forward-looking perspective and a pioneering idea in the
form of “SDG model zones”.
I hope that the report will inspire and reinvigorate efforts around the world to make investment work for
development through SEZs. UNCTAD stands ready to support stakeholders in this endeavour.
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World Investment Report 2019 Special Economic Zones
FOREWORD
Mukhisa Kituyi
Secretary-General of UNCTAD
