Cooperative Authoritarians and Regime Stability

Appendix

Benefits provided by SEZs

Table 3 lists the potential direct and indirect benefits generated from SEZs (the list is not exhaustive). SEZs boost foreign direct investment (FDI) by enticing preselected international investors with prefabricated or impressive infrastructure, low or absent import/export duties, and large labor pools. Because investors are preselected and zones are built specifically to needs, elites are able to screen potential political challengers. Elites can also restrict the employment and foreign exchange earnings generated by SEZs to other trustworthy elites or even outsource labor to less threatening neighboring populations. Indirect benefits include training from multinationals, technology transfer, demonstration effects, and a restricted environment for testing wider economic reform policies among other things. These indirect effects are clearly apparent in China where the Chinese government uses the training provided in SEZs and copies technologies to build their own versions of everything from green technology, transportation systems, cars, and smart phones to their own versions of Facebook (Renren) and Twitter (Weibo).

Explanation of coding scheme for SEZs

A score of 1 = “In Name Only” and represents the passage of a SEZ law. The SEZ program categories range accordingly; 2 = “Isolated,” 3 = “Small,” 4 = “Medium,” 5 = “Large,” and 6 = “Extensive.” Each of these categories represents a significant step up in the size and quality. In the large and extensive categories, this coding implies that a significant amount of wealth and power is being restricted to a screened group of regime supporting elites. According to the theory we should expect that the interaction between higher levels of SEZ program and the inconsistent institutional environment of anocracies will positively and significantly correlate with regime stability is such regimes, ceteris paribus.

Isolated zone programs typically contain a small EPZ, industrial park, or single factory program with mostly local investment. Cameroon is an example of this type of zone system; it has one small EPZ, a single-factory, and mostly local investment (FIAS (Foreign Investment Advisory Service) 2008). Small zone programs have moderate size EPZs or FTZs with at least one foreign investor and a limited number of production sectors. Belarus is an example; its Brest Economic Zone set up in 1996, is of a moderate size and boasts investment from three neighboring countries.

Medium zone programs have several moderate sized EPZs, FTZs, and a Freeport. Venezuela illustrates this category; it has a Freeport (Isla Margarita) and three moderate sized FTZs (Paraguana Peninsula, Santa Elena de Uairen, and Merida). Large zone programs have multiple EPZs, FTZs, or Freeports with multiple sectors and multiple foreign investors. Russia and Singapore fall in the large category. Russia has over 25 SEZs that are ambitiously expanding and Singapore has 8 large freeports and SEZs spread over its territory. Honduras, a country that declared the entire country a SEZ in 1998, falls in this category as well (Farole and Akinci. 2011). Extensive zone programs are essentially large zone programs that represent a larger portion of the state’s macroeconomic outlook and contain “specialized zones” such as Education Cities, Media and Internet zones, or other purposeful zones. The U.A.E., China, Egypt, and Jordan are examples of this category. The U.A.E. and Jordan have every type of known zone, China creates zones for very narrow purposes, Egypt has what are called QIZ (qualified industrial zones) that have been set up by the U.S. in order to foster trade and peace between Egypt, Jordan, and Israel (FIAS (Foreign Investment Advisory Service) 2008).

Explanation of the state fragility index

Political effectiveness measures regime durability, leader years, and total coup events and political legitimacy measures factionalism, ethnic discrimination, and the salience of elite ethnicity. Economic effectiveness is GDP per capita and economic legitimacy is the share of export trade in manufactured goods. Social effectiveness measures human capital development and social legitimacy measures the infant mortality rate. Security effectiveness measures the total residual war and security legitimacy is a measure of state repression. In the original data a zero represents a lack of fragility and a 25 represents extreme fragility. I reverse the score, so that a zero equates to extreme instability (fragility) and a 25 equates to strong stability, in order to make the results more readily interpretable. Taken together, the levels of effectiveness and legitimacy in the political, economic, social, and security realms provide a broad and general picture of regime stability. For a detailed look at the coding rules for all eight levels, see the State Fragility Index Codebook here http://www.systemicpeace.org/inscr/SFImatrix2009c.pdf. See the 2011 Global Report from the Center for Systemic Peace here http://www.systemicpeace.org/GlobalReport2011.pdf. Many analysts use infant mortality to proxy for state “well-being” or sometimes government stability. The State Fragility Index correlates with infant mortality very strongly at the .864 level, but it has better coverage of a wider range of indicators. Table 5 shows what each additive indicator measures.

Plotted state fragility index (alternative outcome variable)

Figure 6:

Predicted political stability by SEZs (1995–2010).

Figure 7:

Predicted political stability by political parties (1995–2010).