SOUTHERN FEDERAL UNIVERSITY
Economic Faculty
TEACHING MATERIALS
Special Academic Discipline
«Special Economic Zones and Offshore Territories»
Programme originator - PhD. Olga Sinskaya
Rostov-on-Don
2011
1. EXECUTIVE SUMMERY
For the developed and developing countries, Special Economic Zones (SEZs) traditionally have had both a policy and infrastructure rationale. In terms of policy, the SEZs can be a useful tool as part of an overall economic growth strategy to enhance industry competitiveness and attract foreign direct investment (FDI). Through SEZs, governments aim to develop and diversify export while maintaining protective barriers, to create jobs, and to pilot new policies and approaches (for example, in customs, legal, labor, and public-private partnership aspects). SEZs also allow for more efficient government supervision of enterprises, provision of off-site infrastructure, and environmental control.
This discipline examines the evolution of SEZs with concentration on last 30 years’ experience in zones reviewing development patterns and economic impact of zones worldwide. The experience shows that while zones have been effective in addressing economic growth and development objectives, they have not been uniformly successful; success in East Asia and Latin America have been difficult to replicate, particularly in Africa, and many zones have failed. Moreover since the on-set of zone development in developing countries, concerns have been raised about the impact on employment (in terms of gender, wage levels and benefits, workers’ rights and work condition), the environment, and related social factors.
The other aspect of SEZs is the modern offshore international business which spreads to the world economy in different spheres.
The central goal of the “Special Economic Zones and Offshore Territories” Special Academic Discipline is presenting to students the main fundamental principles of international business in terms of Special Economic Areas. The main idea is to understand any advantages and disadvantages of using business schemes and projects in the Free Economic Zones or Offshore Territories. Moreover there will be demonstrated the experience of different countries in the sphere of creating special economic order for selected territories and analysis the opportunities for Russian taxpayers in using privileges that some countries can suggest for international actors.
After completing the “Special Economic Zones and Offshore Territories” course, the students are expected to be able:
· to understand the essence and nature of Special / Free Economic Zones and their operations in different countries with various level of economic development;
· to realize any consequences for national economy using the tool of free economic areas;
· to know special characteristics of business in terms of offshore systems;
· to define types and kinds of economic areas and their functions and aims as well;
· to know history and methodology of Russian Special Economic Zones;
· to be familiar with all privileges and special services for Russian Special Economic Zones’ residents;
· to understand main schemes of work with offshore companies;
to discern the role of Free Economic Areas within contemporary global economy.
The structure of discipline is consists of 4 programme units (modules).
Unit 1 “The Theory and Classification of Special Economic Zones” creates the subject matter, structure, goal and objectives, evolution and modern trends of SEZs development. There will be discovered the basis and driving forces for special economic zones functioning in terms of modern global economy.
Unit 2 «The Creation and Operation of Special Economic Zones: International Experience» is devoted to international experience in sphere of SEZs concept realizing. There will be developed different ideas of special economic zones’ role for different countries, their special characteristics and trends for developed and developing countries. Moreover there will be a special review of Russian and Chinese SEZs experience. The special attention will be paid to scientific-technical economic zones in the international practice.
Unit 3 «The Offshore Territories in the Contemporary World Economy» discovers main points of offshore territories phenomenon and their impact on different sides of economy, finance and social life.
Unit 4 «The Principles of Offshore Business Regulation» brings main items of offshore territories regulations internationally. Moreover the national level of regulations is important in context of economic security and fight with the illegal incomes and money laundry.
The following methods and forms of study are used in the course:
· Lectures with presentations
· Colloquium
· Writing
· Self-study
· Use of different reference books and Internet resources
At the end of the course the students are supposed to write an essay and to pass a test. Upon the successful completion the students will gain 6 credits.
Author of the discipline is Olga Sinskaya, PhD, senior lecturer of International Relations and World Economy Department, Economic Faculty of Southern Federal University, Rostov-on-Don, Russian Federation
+7863240 96 27
2. COURSE SCHEDULE
Duration
Total / Class hours / Self-studyTotal / Lectures / Seminars
1
1.1
1.2 / Unit 1 «The Theory and Classification of Special Economic Zones»
Nature and essence of Special Economic Zones. The role and position of Special Economic Zones in the system of World Economic Relations
Special Economic Zones are the tools of attraction of investments to develop regional economy / 5
5 / 4
4 / 2
4 / 2
-- / 1
1
2
2.1
2.2
2.3 / Unit 2 «The Creation and Operation of Special Economic Zones: International Experience»
Special Economic Zones in the countries with different level of economic development
Special Economic Zones in the transition economies
Innovative, scientific and technological economic areas / 7
10
3 / 3
4
2 / 2
2
2 / 1
2
-- / 4
6
1
3
3.1
3.2
3.3 / Unit 3 «The Offshore Territories in the Contemporary World Economy»
Essence and role of Offshore zones in the modern global economy
Offshore business: international experience
Offshore business in Russia and for Russian companies / 5
7
4 / 4
6
3 / 4
4
2 / --
2
1 / 1
1
1
4
4.1
4.2 / Unit 4 «The Principles of Offshore Business Regulation»
International practice to regulate offshore companies activity
Offshore regulation in Russia / 3
2 / 2
2 / 2
2 / -
- / 1
Summarizing discussion, taking the test / 8 / 2 / - / 2 / 6
Total: / 59 / 36 / 26 / 10 / 23
3. PROGRAMME
Unit 1 “The Theory and Classification of Special Economic Zones”
The integrated aim of the Unit. This Unit is devoted to the essence of actual thing in modern economic life of different countries which is called Special Economic Zones. These zones are used by governments as the specific testing area for examination of new policies and regulation tools in the sphere of economic and social life. This block of lectures contents the following topics: SEZs essence, evolution, classification, motivation of SEZs creation, goals difference for developed and developing countries, attraction for investors, privileges for residents.
Subject 1.1. Nature and essence of Special Economic Zones. The role and position of Special Economic Zones in the system of World Economic Relations.
Introduction. The place of Special Economic Zones and Offshore Territories in the system of modern International Economy.
Different scientific approaches to the definition of Special Economic Zones. SEZs as a factor of accelerated economic growth. Specific features and SEZs characteristics. Special Economic Zone in terms of Russian Federal Law “About Special Economic Zones”.
The history of SEZs creation in different countries in the world. Evolution of different SEZs types. International experience. Diversifications of functions and activities within SEZs. SEZs generations.
Criterions of SEZs classifications. SEZs activity types. SEZs border types. Full-serviced zones. Cross-border co-operation.
Goals and objects of Special Economic Zones. Role of SEZs for developed and developing countries.
Subject 1.2. Special Economic Zones are the tools of attraction of investments to develop regional economy.
Preconditions of SEZs creation and developing which are attractive for foreign investors. Infrastructure requirement as one of the most important things to attract international capital sources.
Types of business privileges in the SEZs. Special tools of FDI attractions to develop industrial and market potential: international practice.
Principles of business activity in the SEZs for attracting and utilizing of internal and external territory potential. Motivation system to attract foreign investors to the special economic zone. Principle of competitive advantages in the SEZs’ market. Costs necessary to create an effective competitive zone.
International experience of foreign investment attraction.
Main directions of FDI’s attracted through the SEZs and their impact on the national economy.
Unit 2 «The Creation and Operation of Special Economic Zones: International Experience»
The integrated aim of the Unit. The main idea of this module (block of lectures) is to research a special experience of foreign countries in the sphere of creation and developing of special economic zones. In spite of a lot of differences with the goals and objectives of SEZs in different countries with different levels of development, the tool of SEZs is considered as a very effective and attractive to stimulate business activities. Different countries use a wide range of tools within SEZs in accordance with their aims and economic policies. The study of international experience is more than actual today for Russian economy while it tries to develop an effective concept for Russian SEZs.
Subject 2.1. Special Economic Zones in the countries with different level of economic development.
Zones of Foreign Trades (ZFT) in USA. Special characteristics of American ZFT. Types of ZFT: GP- and SP-zones. Enterprise zones. Key feature of export processing zones in USA. NAFTA as an international integration special economic zone with USA participation.
Key features of SEZs activities in some European high developed countries in the XX-XXI centuries. SEZs of Germany, Great Britain, Denmark, Ireland (“Shannon”) etc.
Main types of Japanese SEZs: technopolices and Free Trades Areas (FTA). Government support of SEZs in Japan.
SEZs is the fundament for the national concept of economic growth in developing countries. Special characteristics of SEZs in developing countries. Their key features. Role of export processing zones for economic growth promotion in developing countries. Export Processing Zones in Syria, India, South Korea, Indonesia, Philippines etc.
Subject 2.2. Special Economic Zones in the transition economies.
Countries of Baltic, Central and East Europe in the SEZs market. Goals and objectives of SEZs in these countries. Key features of Free Customs Zones in the European countries in transition. SEZs of former Yugoslavia countries, Bulgaria, Lithuania and other Baltic and Central and East Europe countries.
Chinese experience is an example of effective implementation of SEZs ideas to the national economy. The role of SEZs for integration of Chinese national economy into Global International Economic System. SEZs of China is a channel of attraction of foreign direct investment and technology, management experience and finance as well. Stages of SEZs development in China. Key features of state policy for investment attraction in China. Seaside Open Cities in China and their role for the internal districts development. Difficulties and problems of SEZs development in China. “The Belt of Openness” in the Chinese economy.
Main characteristics of Russian SEZs development. Stages of SEZs’ activities in Russia. The Programme of SEZs development in USSR and main reasons of its failure. Creation of SEZs in some regions of Russian Federation in 90-s XX. Goals and objectives of first Russian SEZs. Reason of ineffective SEZs performance. Federal Law “About Special Economic Zones”, 2005. Concept, ideas, goals and objectives of new SEZs in Russia created in terms of Federal Law. Russian Federal Agency of SEZs Regulations.
Special Economic Zones in the CIS countries (Belarus, Ukraine, Kazakhstan).
Subject 2.3. Innovative, scientific and technological economic areas
The role of scientific and technological economic zones for the innovative process development and hi-end technologies realizing. Elements of the innovative activities mechanism I the system of market economy.
Modifications of scientific and technological economic zones. Parks of Research and Development. Technopolices and Technoparks.
Scientific-Technical cooperation within the technological economic zones, parks of research and development, innovation and research areas.
Structure of the biggest technological economic zones.
Key features of technological economic zones in countries with different level of development. Technopolices in Japan and Techoparks in USA. Characteristics of technological economic zones in Europe and Asia. Russian technological economic zones.
Unit 3 «The Offshore Territories in the Contemporary World Economy»
The integrated aim of the Unit. This module (the block of lecturers) opens the essence of offshore zones in the contemporary system if World Economy. Despite of rather short history of this tool of regional economy stimulation, this type of SEZs has a significant role in the global business activities. A half of all finance transactions and one third of world turnover is provided through the offshore business structures. There are more than 2000 units in the world where the offshore regimes are used. The most business organizations use offshore jurisdiction for their business deals. This module gives the explanation of offshore business essence, provides main business schemes of utilizing offshore zones for regular practice of some companies, describes the classification of main offshore jurisdiction.
Subject 3.1. Essence and role of Offshore zones in the modern global economy
Actuality and range of offshore activity in terms of modern World Economy. The role of offshore territory for the contemporary global and national economy. Factors of demand increasing for services provided by offshore companies. Aims and methods of offshore companies / zones utilizing in terms of modern International Economic Relations.
Main attributes of offshore jurisdictions.
Offshore zones variety. “Tax Heaven”. Countries which provide preferential conditions for special activity. International treatments of avoidance of double taxation. Offshore territories. Untraditional offshore zones (Ireland, Cyprus).
Offshore centers specialization. Offshore centers and zones for banking and insurance activity. Investment holding centers. Offshore zones for ship-owners and international transportation.
Subject 3.2. Offshore business: international experience
Basics of offshore business. Adequate degree of business unit residence for taxation. Offshore business. Offshore company. Organizational and legal forms of offshore business. Tax transparency.