The writer is senior economist in the division on investment and enterprise at UN Trade and Development, and coordinator of the Global Alliance of Special Economic Zones

Through my work at UN Trade and Development (Unctad) over the past decade, I’ve had the opportunity to study, visit and engage with special economic zones (SEZs) from around the world. It’s inspiring to see how a growing number of governments are using SEZs as a policy tool to catalyse sustainable development, echoing Unctad’s call in 2019. 

For many years, Unctad has been working to accelerate SEZs’ contribution to the UN Sustainable Development Goals. This includes supporting them to align their strategies and practices to sustainability drivers, including the Paris 2050 climate goals, increased foreign direct investment in green technologies, and investors’ growing focus on sustainability to mitigate risk, ensure long-term returns and meet consumer demand for more responsible business practices. Add to that the rise of sustainability standards and regulatory measures (such as the Carbon Border Adjustment Mechanism) and it’s clear that SEZs must adapt, or risk being left behind. 

Postcards from China

I saw firsthand how SEZs are evolving on a recent trip to China’s International Fair for Investment and Trade in Xiamen. In addition to touring some of the country’s leading zones, we held the third annual conference of the Global Alliance of Special Economic Zones (Gasez), which aims to help SEZs become key policy instruments for sustainable development.

I presented an upcoming Unctad report based on a survey of 50 so-called SDG Model Zone Partners, identified by Gasez for their commitment to sustainability, and with whom Gasez is building a collaborative network. The conference saw experts, policymakers and heads of SEZs and science parks — from Jamaica to Djibouti and Poland — share their experiences in how SEZs can integrate sustainability into their core strategies. 

So, at the end of a whirlwind few days, how are SEZs contributing to sustainability? It’s clear that the most forward-looking are morphing beyond the traditional SEZ model in five different ways.

First, they are ecosystems of sustainability data. That means leveraging cutting-edge technology to monitor and improve tenants’ sustainability outcomes and support the zones’ operations. For example, Hefei’s Economic and Tech Zone in China uses artificial intelligence to keep track of energy production and consumption, and manage waste. 

Second, they are test beds for innovation. They offer a space where companies can experiment with new sustainability technologies and practices, and governments can ‘pilot’ innovative policy measures from sustainable urban design to sustainability-linked incentives. One innovative programme in China’s Tianjin Economic Tech-Development Zone offers a tool for tenants to adopt sustainable lifestyles by tracking their daily carbon emissions, and awards participants sustainability tokens redeemable for products and services. 

Third, they facilitate sustainability. This can mean guiding tenant companies on regulatory changes, sensitising them to sustainability standards and carbon emissions, and otherwise helping them improve their sustainability performance. Suzhou Industrial Park, jointly developed by China and Singapore, offers an environmental, social, and governance self-assessment and service platform for tenant companies. 

Fourth, SEZs are acting as incubators for sustainable enterprises. They create environments to help foster innovative start-ups in sectors like climate change, health and food security, such as Masdar City’s sustainability start-up accelerator or Zonas Franca Barcelona’s Industry 4.0 incubator. 

Finally, they are sustainability talent hubs. By collaborating with academia, they can assess and address sustainability skills gaps and develop training programmes tailored to the needs of tenant companies. In Costa Rica, Coyol Free Zone has developed an education platform for the life sciences and smart manufacturing sectors while Tanger Med in Morocco established an in-zone technical high school.

Beyond these new characterisations, one thing is clear: SEZs that lead on sustainability are part of broader, government-wide efforts to meet global development goals. As more SEZs are established across the world, governments — particularly those in low-income countries — need the right support to ensure these zones contribute meaningfully to sustainable and inclusive growth. Last month, we invited more SEZs to join the SDG Model Zone Partners initiative, to enhance peer learning and collaboration in this area. 

By making sustainability a core focus, SEZs can enhance their value proposition to investors and become valuable policy tools in shaping a more resilient and equitable global economy.

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This article first appeared in the October/November 2024 print edition of fDi Intelligence