Ecological Enterprise Zones: Next Generation Industrial Strategy or Fool’s Gold?

The Enterprise Zone (EZ) is a policy of deploying spatially targeted fiscal and deregulatory incentives for development such as tax relief, planning simplification, or removal of social rights. There are estimated to be over 3,500 EZs in 130 countries in the developing and developed world which account for more than $200 billion in exports and directly employ at least 40 million workers (Farole and Akinci, 2011). An examination of the history of EZ theory shows that the policy idea has been around for centuries and continues to thrive in different forms to the present day, the types of which vary in terms of purpose and application: emerging in the 1800s to take advantage of port routes (e.g. Hong Kong), and re-surfacing in a new form during the 1970s to reverse city decay (e.g. Isle of Dogs/London). More recently in the 2000s, EZs have evolved again, to accelerate low-carbon growth in the guise of Ecological Enterprise Zones (EEZ) (e.g. New York’s solar empowerment zone) (Cato, 2013; Monaghan, 2013). But what evidence is there that EZs deliver lasting benefits for local communities in the form of social mobility? Or that EZ policies will also help to tackle climate chaos?

 

There appears to be an inverse pyramid of evidence to support the case for the blanket application of EZs, whereby a lot of theory is stacked on top of little evidence. Yes, there is compelling evidence to suggest that different versions of EZs do contribute to growth or regeneration, for example in Shenzhen (von Claus Knoth, 2000), the Isle of Dogs/ Canary Wharf (Sissons and Brown, 2011) and Indiana (Wilder and Ruben, 1996). Yet a distillation of various studies by Infrangilis finds the rationale for EZ policy over other types of economic instrument (e.g. education, place-making, or community enterprise) to be inconclusive given that there are many examples of failure too in terms of high-cost per job created, no significant local employment impact or a shift of value from the public purse to private landlords via increased land values such as in Colorado (USA) and Salford (UK) respectively (Erickson and Friedman, 1990; Greenbaum and Landers, 2009; Robson, 1998). The process of policy mobility is important in explaining why EZ remains politically popular (Page, 2005): the spread of a neoliberal idea to remove the dead hand of the state and unleash market forces to tackle unemployment; and ill-conceived state implementation whereby a policy label is adopted without proper consideration for clear definition or special measures (Mossberger, 2000). Another explanation is the confusion caused to policy-makers by contradictory think-tank studies about the success of different types of EZ policy regimes and which do not make recommendations that are relevant and lead to policy improvement.

 

Compared to their high-carbon cousins, as an emergent phenomenon there is sparse empirical studies on the impact of EEZs. Despite this, a global mapping exercise by Infrangilis suggests that they are on the rise: there are already 52 EEZs in operation, spanning 23 countries in Africa, Asia, Europe, the Middle East, Latin America and North America. Examples range from Sunderland’s A19 ultra low carbon vehicle corridor (UK) and New York’s solar empowerment zone to Chittagong’s low-carbon garments export processing area (Bangladesh) and Cape Town’s Atlantis green manufacturing zone.

 

It can be argued however that there may be inherent contradictions for an EEZ between unabated growth and abated emissions. In the case of Baoding the economic boom from its solar panel industry means its carbon intensity – the amount of emissions per unit of GDP – appears to be higher than peer city equivalents (Su et al, 2012). That is, Baoding may not actually be a green EZ on the basis that, whilst it is manufacturing low carbon products, in the absence of decarbonised national power grid it is doing so in a carbon-intensive way. It has also been suggested there may be limitations to what a city can do by itself when it comes to green growth (UN-Habitat, 2012), because without a national strategy for EEZs, they may be inappropriately selected, non-complimentary, fail to build trust and create unnecessary competition. For instance in England, 15 of its 24 EZs have an explicit focus on exploiting some form of green technology, ranging from marine energy to electric vehicles; and in November 2014 the Communities Secretary Eric Pickles proposed plans for a second wave of EZs (Rigby and Bounds, 2014). But without clarity on an English vision for national green growth which dovetails with local development plans it is unclear whether this is gold dust or fool’s good.

 

These insights highlight the importance of better understanding the potentially signification contribution of EEZs to next generation industrial strategy around the world. This in terms of helping to make a big shift to inclusive and sustainable growth. Consequently, the next phase of Infrangilis’ work aims to: understand why and how the policy is being transferred in different contexts, identify good (and bad) practice examples from around the globe; and distil a set of practical recommendations for the benefit of the policy community.

References

 

Bondonio, D. and Engberg. J., 2000, ‘Enterprise zones and local employment: evidence from the States’ programs’, Regional Science and Urban Economics, 30: 519-549.

Cato, M.S., 2013, The Paradox of Green Keynesianism (London: Green House).

Erickson, R.A. and Friedman, S.W., 1990, ‘Enterprise zones: 2. A comparative analysis of zone performance and state government policies’, Environment and Planning: Government and Policy, 8: 363-378.

Farole, T. and Akinci ,G., 2011, Special Enterprise Zones: Progress, Emerging Challenges and Future Directions (Washington DC: The World Bank).

GOV.UK (2014) Press release: ‘Enterprise zones pass 12,000 jobs mark’.

Greenbaum, R.T. and Landers, J. 2009, ‘Why are State Policy Makers Still Proponents of Enterprise Zones? What Explains Their Action in the Face of a Preponderance of the Research?’ International Regional Science Review, 32(4): 466-479.

Monaghan, P., 2013, ‘Low carbon enterprise zones: towards a fossil fuel free economy’ in The Green Economy of Cities: A World Compendium on the Green Urban Economy, 3(1), eds. Simpson, R., Otto-Zimmerman, K. (Freiburg: Springer).

Mossberger, K., 2000, The Politics of Ideas and Spread of Enterprise Zones (Washington: Georgetown University Press).

Page, E.C., 2005, ‘The Origins of Policy’, The Oxford Handbook of Public Policy: 205-224.

Rigby, E. and Bounds, A., 2014, ‘Second wave of UK enterprise zones planned’, Financial Times, 11 November 2014.

Robson, B., 1988, Those Inner Cities: Reconciling the Economic and Social Aims of Urban Policy (Oxford: Clarendon Press).

Sissons, A. and Brown, C., 2011, Do Enterprise Zones Work? (London: The Work Foundation).

UN-Habitat (2012) Urban Patterns for an Urban Economy: Clustering for Competitiveness (Nairobi: UN-Habitat).

von Claus Knoth, E., 2000, Special Economic Zones and Economic Transformation: The Case of the People’s Republic of China,  PhD dissertation, Konstanz University.

Wang, T., Zhang, Z., Wu, J., 2010, Towards Low Carbon Cities of China’s SEZs – The Case of Shenzen (Lanzhou: Chinese Academy of Sciences).

Wilder, M.G. and Rubin, B.M., 1996, ‘Rhetoric versus reality: a review on studies of State Enterprise Zone programs’, Journal of America Planning Association, 62(4): 473-491.