Because of the preferential conditions and possible clustering effects offered by SEZs, they have the potential to trigger industrial transformation and promote economic development in the regions and countries where they are established. This can result in various socio-economic benefits, such as export generation, employment and wealth creation, urbanisation and industrial upgrading. It is with these objectives in mind that many governments favour the establishment of SEZs. 

However, there are also several pitfalls that come with the establishment of SEZs, such as planning, governance and legal pitfalls. These can trigger various problems for SEZs, such as delays in zone establishment, unsuitable design of SEZs and associated urban planning, inconsiderate regimes for expropriation and compensation, poor governance of labour, migrants and the environment, inadequate incentives and regulatory frameworks for investors, etc. SEZs do not have a strong record of success in boosting economic development, many perform below anticipated targets in attracting investments and generating exports and employment, and some do not take off at all. Yet, as enclaves that often allow companies to produce and manufacture under preferential investment, regulatory, labour, trade and environmental conditions, they are known to generate unwanted side effects that may outweigh the positive outcomes. Locals are affected even before the zones are established and regardless of the degree of success of the zones. It is not uncommon for SEZs to trigger local protests and considerable dissatisfaction. It is therefore important that considerations of ZSR are built into the processes of planning, establishment, management and operation of any SEZ. 

In China, the impact of SEZs has been transformative for the economy, contributing significantly to the remarkable economic growth that China experienced. This was partially due to historical coincidence – China established SEZs precisely at the time when a re-organisation of global value chains was taking shape. However, it was also because there were far fewer SEZs in existence compared with today. In present times, the large number of zones worldwide and competition between them serves to prevent SEZs from repeating China’s remarkable experience. While many (but not all) SEZs have meaningful impacts, generating some exports and employment that are valuable for local and national economies, they are therefore not transformative in the same way as the Chinese SEZs. This means that, while there was certainly a lack of ZSR in China’s SEZs, which accepted migrant precarity, environmental degradation, and many other ills, these problems (and the possibility of widespread public discontent) could be offset because communities and individuals experienced such rapid improvements in their livelihoods. However, as today’s SEZs are rarely transformative – indeed sometimes do not take off at all – it is important that they do adopt ZSR, to ensure that they do not unnecessarily harm local areas, communities or individuals. Successfully performing zones should be seen to be those that provide for genuinely inclusive and sustainable growth in a way that benefits society, people and the environment.