Chinese-initiated Special Economic Zones in Africa: a case study of Ethiopia’s Eastern Industrial Zone

Abstract: The current paper addresses the Chinese-initiated Special Economic Zones (SEZs) in Africa through a case study of the Ethiopian Eastern Industrial Zone (EIZ). The paper investigates the development potential of this innovative cooperation strategy for Africa based on the theoretical foundation of an unbalanced growth-strategy, offering a new perspective of understanding the role of SEZs as a development tool. In extending the theoretical foundation to include the role of global values chain, the potential for the EIZ to be a tool for development in Africa hinges on the four criteria of ensuring dynamic economic growth in the zone, creating strong backward linkages from the zone, the presence of firms conducive to join the global value chain in the zone and the working cooperation between the zone’s main actors. The findings of the study show that while SEZs have the potential to be tools for development through an unbalanced growth process, the prospect for the EIZ to be such a tool is currently small as the EIZ does not fulfill the four criteria. However, if the policy frame surrounding the zone is improved, if more firms conducive to global value chains and appropriate to the Ethiopian context fills the zone and if the cooperation between the actors is reformed, the EIZ has the potential to improve this prospect and become a valuable development tool for Ethiopia in line with the theory of SEZs as an unbalanced growth strategy.