The Prospective Nong Khai Special Economic Zone and the Promotion of Connectivity in the Greater Mekong Subregion

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Pinyochatchinda, Supaporn and John Walsh, “The Prospective Nong Khai Special Economic Zone and the Promotion of Connectivity in the Greater Mekong Subregion,” paper to be presented at the International Conference on Commerce, Financial Markets and Corporate Governance/2nd International Conference on Research Methods in Management and Social Sciences (Shinawatra University, Thailand: February 7th, 2015).

Abstract:

Special economic zones (SEZs) have become a standard part of the attempt to secure rapid economic development in Southeast Asia and across most of the developing world. They focus on import-substituting, export-oriented intensive manufacturing based on low labour cost competitiveness. The location of SEZs depends on factors such as proximity to markets, to sources of labour and to sources of natural resources which can be processed inside them. A relatively new approach to SEZs, especially in the Greater Mekong Subregion (Thailand, Cambodia, Myanmar, Laos, Vietnam and Yunnan province and Guanxi Autonomous Zone of China), is to create cross-border or border-facing SEZs. The idea is to harness competitive advantages available on both sides of the border with reduced transaction costs resulting from transportation and infrastructure. One such example of an SEZ of this type is in Nong Khai province of Thailand, which borders the Lao PDR capital of Vientiane and its surrounding province across the River Mekong. Cross-border trade and investment in Nong Khai is already estimated to be worth some US$1,212 million annually and this is likely to increase significantly as further stages in the implementation of the ASEAN Economic Community (AEC) take place, particularly the 2015 changes that are projected to take place. This will include some freer movement of skilled labour across borders for a small number of job categories, although that number is likely to increase in the future. It seems logical, therefore, to establish a border-facing SEZ in Nong Khai province to take advantage of cross-border complementarities and to enhance connectivity in this context. What will be the implications of such a policy? What problems are likely to be faced and how are they to be overcome, if at all? This paper explores this issues using a variety of qualitative and quantitative research methods and using comparable case studies from other relevant locations. The results are discussed and policy implications for future progress highlighted.

Keywords: ASEAN Economic Community (AEC), connectivity, Nong Khai, special economic zone (SEZ)

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