Locational Strategy of Special Economic Zones in India

Abstract

The establishment of special economic zones (SEZs) in Indian districts is intended to bring rapid economic growth to India. However, the data on SEZs show that SEZs are concentrated in only a few Indian districts and thus aggravate the problem of regional inequality. In this paper, the strategy of concentration of SEZs is analysed with a backdrop of the new economic geography theory. The data of the variables are extracted from Census 2011 and other sources for all 640 districts. The Tobit model is used to determine the locational factors behind the establishment of the SEZs in a district of India. The results show that the variables such as urbanization, distance from megacity, districts with a seaport and districts with airports have a significant impact on the number of SEZ approvals as well as SEZ notifications. The concentration of SEZs is mainly due to favourable market and infrastructural conditions. JEL codes: O10, C24, D63