Refugee special economic zones

Date03 September 2018
DOIhttps://doi.org/10.1108/JEPP-D-18-00030
Pages290-303
Published date03 September 2018
AuthorLotta Moberg,Sebastian Reil
Subject MatterStrategy,Entrepreneurship,Business climate/policy
Refugee special economic zones
Lotta Moberg
William Blair, Chicago, Illinois, USA, and
Sebastian Reil
Peking University, Beijing, China
Abstract
Purpose The purpose of this paper is to show how special economic zones (SEZs) can be applied to refugee
camps. Zones are powerful tools for investors to act like institutional entrepreneurs, who promote institutional
reform by pursuing exemptions from government constraints and taxes or by advocating for reform. Refugee
SEZs (R-SEZs) would similarly allow for institutional entrepreneurs to promote broader immigration reform.
Design/methodology/approach The authors apply a political economy framework to R-SEZs that
explores the factors that make them feasible. A mathematical model is applied to explicitly define the
conditions under which the zones could succeed in benefiting refugees, investors and the host economy alike.
Findings Under certainconditions, appropriate taxrates can be applied to R-SEZs thatmake them feasible.
Feasibilityis determined by being beneficialfor the host country while also attracting investors.The zones are
feasible if theyattract enough foreign investorsas opposed to domestic investors.Other factors contributing to
zone success are higher wages outside thezone, lower wages inside it, higher costto the government of non-
employed refugees, lower relocationcost for businesses and a higher tax rateoutside the zone.
Practical implications This policy would aim to provide job opportunities to refugees, profit
opportunities to investors and lower net costs for the host government. R-SEZs should be considered by
policy makers in countries hosting refugee camps. Just like the old model of SEZs, they can benefit workers
while also enhancing the governments budget.
Social implications R-SEZs have the potential to alleviate the refugee crisis the world is facing, which is
arguably one of the largest social challenges of our time.
Originality/value This paper is the first to outline the political economy conditions for SEZs applied to
refugee camps.
Keywords Refugees, Special economic zones, Refugee camps, Integration
Paper type Research paper
1. Introduction
Special economic zones (SEZs) have attracted investors, increased exports and provided
employment opportunities in numerous countries where they have been introduced. While
these sorts of benefits of SEZs are commonly cited as justifications for the policy, they
cannot explain why SEZs are ever better than more general reforms.
SEZs can be superior to general reforms when they help bring about institutional and
politicalchanges that would otherwisemeet with too much politicalresistance. This happensif
the zones are used as tools for general reforms through a gradual process (Moberg, 2017, c h.3) .
For this to happen,zone investors must act as institutional entrepreneurs, by obtaining fiscal
and regulatory exemptions and advocating for liberalization (Li et al., 2006).
We apply these insights to one of the most contentious political areas, that of refugee and
immigration policy. We argue that SEZs can be combined with refugee camps to provide
opportunities for investors, refugees and governments alike, and eventually lead to wider
immigration policy reforms.
The next section makes the case for SEZs as tools for institutional entrepreneurs. Section 3
describes how SEZs may be applied to refugee camps. Section 4 discusses refugeesaccess to
large-scale commercial production and trade. Section 5 explains how refugee SEZs (R-SEZs) can
be made attractive for investors as well as for host governments. In Section 6, a formal model
illustrates the trade-offs that R-SEZs imply and shows the existence of a Pareto-improving
solution. Section 7 discusses how R-SEZs can ultimately be a way toward refugee integration,
and Section 8 concludes.
Journal of Entrepreneurship and
Public Policy
Vol. 7 No. 3, 2018
pp. 290-303
© Emerald PublishingLimited
2045-2101
DOI 10.1108/JEPP-D-18-00030
Received 4 July 2018
Revised 11 July 2018
Accepted 11 July 2018
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/2045-2101.htm
290
JEPP
7,3

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