can free zones

A World Free Zones Organization survey aimed to discover whether free zones have a role in advancing the UN's Sustainable Development Goals. Dr Mohan Guruswamy explains.

The complex challenges arising out of the dynamic nature of global economic growth and social development that prompted the UN to advance or promote the 'five Ps' – people, planet, prosperity, peace and partnership – resulted in the declaration of its Sustainable Development Goals (SDGs) in September 2015.

The 17 goals adopted by world leaders as part of the 2030 Agenda for Sustainable Development aim, among other things, to end poverty, fight inequality and injustice, and tackle climate change in the next 10 to 15 years. The SDGs are now perceived to be the world’s agenda and action plan, the outcome of which, it is believed, will be felt globally in the years to come.  

World FZO opportunity

Several of the SDGs provide a great opportunity for the World Free Zones Organization (World FZO) and its constituents to make a notable contribution in lifting the living standards of people, in protecting and optimally utilising the planet’s finite natural resources, and more generally spreading prosperity and peace for all.

World FZO launched the Free Zone of the Future Programme (FZF Programme), a global initiative for local prosperity that seeks to empower free zones and assist them to build and contribute to a sustainable and prosperous future – one that supports the growth of local economies and communities while simultaneously benefiting from global market dynamics.

Central to World FZO’s present and planned future activities – specifically advancing the ‘free zone of the future’ concept – are three SDGs: decent work and economic growth (number eight); industry, innovation and infrastructure (number nine); and partnerships for the goals (number 17). Other goals are, of course, important adjuncts.

Conceptually, World FZO’s FZF Programme seeks to promote economic growth, boost industrial and commercial activities, create livelihood opportunities, foster innovation, make optimal use of natural resources, and achieve all these and more by networking and striking appropriate partnerships.

The FZF Programme consists of three pillars (including best-in-class practices, innovation and sustainability), and each contains three elements each. Best-in-class practices include knowledge-based, certified and tech-ready zones; innovation includes entrepreneurial, SME developer and innovative zones; and sustainability includes environmentally friendly, good-place-to-work and socially responsible zones. There are strong links between the nine elements of the FZF Programme and their contribution to the SDGs.

SDG relevance

As economic entities, free zones across the world have played a key role in promoting investment and free trade as well as generating employment and incomes. Now the conviction that they can make a positive and notable contribution to the advancement of SDGs is gaining ground.

It is against this background that World FZO, the apex body of free zones around the world, decided to seek the views of experts from across geographies about the relevance of SDGs and the role that free zones can play in advancing them.

Through interviews based on questionnaires and telephone conversations, the World FZO’s knowledge management unit approached several domain experts to elicit their views, perceptions and suggestions. Not unexpectedly, there was unanimity among them about the relevance of SDGs to free zones and the positive role that free zones can play to advance relevant SDGs.                

What follows is a summarised version of the excerpts of the interviews.

On the role of free zones with respect to SDGs

While there is little doubt that free zones contribute to advancing SDGs, different types of free zones contribute differently to them. The nature of economic activity and even location or geography may influence this. In fact, the core activity of the free zone may be a key determinant of the nature of contribution. For instance, the work style or functional aspects of free zones that are manufacturing-oriented would be different from those that are, say, service-oriented, and therefore their contribution to sustainable development would also be different. It is important to bear this in mind.

In a country such as India (where free zones are called special economic zones), there has been notable flow of investment, creation of jobs, promotion of industrial production and exports, all of which go to foster economic growth. In this case, it may be said that the contribution of free zones to SDGs is less direct, but no less relevant. In other words, free zones do contribute to moving towards some of the SDGs. 

Contribution of free zones to achieving SDGs

Across geographies, expert respondents highlighted the fact that free zones have invariably brought in investment, built infrastructure, started economic activity, generated jobs and promoted exports in addition to skills development and the fostering of gender equality. Each of these activities has contributed to moving towards many of the goals. Indeed, the positive contribution of free zones towards SDGs is seen as more relevant in emerging or low-income economies.

ILO’s Decent Work Agenda and free zones

According to the International Labour Organization (ILO), 'decent work' involves opportunities for work that are productive and deliver a fair income; security in the workplace and social protection for families; better prospects for personal development and social integration; freedom for people to express their concerns, organise and participate in the decisions that affect their lives; and equal opportunity and treatment for all women and men.

The ILO is developing an agenda for the community of work, represented by its tripartite constituents, to mobilise their considerable resources to create those opportunities and to help reduce and eradicate poverty. The Decent Work Agenda is the balanced and integrated programmatic approach to pursue the objectives of full and productive employment and decent work for all at global, regional, national, sectoral and local levels. It has four pillars: standards and rights at work; employment creation and enterprise development; social protection; and social dialogue.

The SDGs also proclaim decent work for sustainable economic growth.

Not all free zones contribute uniformly to a decent work agenda or, for that matter, sustainable development. Bringing in uniformity and standardisation in work practices is a challenge as the local labour laws, minimum wages acts, employment conditions and working environment vary widely in different zones across the globe.

Evidence of contribution by free zones

Experts have listed a wide variety of evidence across geographies to demonstrate the contribution made by free zones. It encompassed on-the-ground activities such as the creation of green zones, the generation of solar energy, improved sanitation and cleanliness, strict law and order, and improving the overall workplace experience. More solid evidence from India highlighted that in the past decade incremental investment in free zones was $55bn, job additions were $1.4bn and exports nearly doubled to about $70bn.

It may be relevant to record that what has been proffered as evidence by the experts may be only a small part of arguably large contributions made by free zones around the world in recent years.  

Future contribution of free zones to SDGs, on the back of the 'free zone of the future' theme

Some of the suggested ways in which free zones can contribute in the future include to focus on sustainability; create a ‘healthy’ workplace; promote transparency; and focus on the health and energy sectors.

The role of World FZO 

World FZO can act as a catalyst in accelerating free zones’ contribution towards the SDGs. Such a role would envisage unleashing an awareness and education campaign among free zones around the world, compiling best practices from around the world and sharing with others as well as working with multilateral agencies such as the World Trade Organization to undertake research projects for the benefit of free zones.

Importantly, experts utilised by World FZO can mentor those free zones that need handholding, and help to build capacity among them to adopt best practices, to innovate and to function sustainably.    

Dr Mohan Guruswamy is chief knowledge officer at the World Free Zones Organization

This article is sourced from fDi Magazine
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