Special economic zones: What have we learned?

Paul Romer imagines a kind of private micro-state, a “charter city” built on unused land, donated from a country that wants to stimulate economic growth. It needn’t be a place mired in poverty and corruption and unable to find its way out, such as Honduras, where the charter city idea has recently found support — and competition. A professor of economics at New York University, Prof. Romer thinks the concept could be adopted in advanced countries, too, such as Canada.

China Analytics submits:The fall political season is about to get underway in China, and in advance of more official statements from the central government about the focal areas for the next 5-year plan provincial governments are leaking the broad strokes of their own proposed agendas to the media. Behind the scenes provincial and city-level governments are fully engaged in competition for preferential policy treatment where it comes to land usage, tax transfers and directed lending.

Over the past decade foreign direct investment (FDI) has become a major force in developing and transition economies. In 2010 the volume of FDI to developing and transition economies for the first time exceeded the FDI to rich economies.

A few days ago, I reported on a distressing new report from the WTO on the recent increase in global trade protectionism.  Unfortunately, it appears that the WTO's report has plenty of company, as a relatively new article from the New York Times makes clear:

We recently brought you stunning photos of early-'80s Macau, before that city became a worldwide gambling Mecca. Today, we want to show you a city whose transformation is perhaps even more incredible: Shenzhen, China.

That China openly manipulates, goalseeks and otherwise distorts its economic data is no secret to anyone: and it is not at all surprising - after all the Chinese GDP model is based on how much goods and services are produced, which means end demand is completely irrelevant, and thus unfalsifiable. It also explains why as part of its miraculous 8% GDP growth year after year, we get such wonderful externalities as ghost cities, the biggest mall in the world lying totally empty, and shoddy buildings that tumble over.

Jang Song Taek meets with China's commerce minister, in the highest-level visit from North Korea since 2011.

Few would dispute China’s importance to the world economy today; from small villages to large cities, its presence is now felt almost everywhere. The Economist recently went so far as to call China “the indispensable economy,” reporting that more and more multinational companies are realizing an increased share of their revenues from inside Chinese borders.