I recently discovered that Latvia has five Special Economic Zones (SEZs) which have the purpose of assisting regional development by bringing in more foreign direct investment (FDI) and creating more jobs. The SEZs have a favourable tax climate with considerable rebates and much lower rates compared to normal Latvian companies (though that last link is from 2014).
However, when I started investigating how well these SEZs are actually performing, I found Gulbis' 'Foreign Direct Investment and Special Economic Zones in Latvia' from 2018 which notes that the Latvian SEZs underperform compared to examples in Jordan, Serbia, Poland, Panama, the Dominican Republic, and China—the author does note that the methodology isn't excellent, but Latvia nearly always comes out the worst in:
- relative numbers of people employed;
- amount of FDI attracted;
- jobs per hectare;
- FDI per hectare.
Gulbis' conclusion states "... Latvian SEZs cannot achieve their intended goal of regional development as long as the economic impact they have is so miniscule".
Therefore, it seems appropriate to wonder whether the political discussion has shifted with respect to the SEZs, presuming that they are a factor in elections at all (which, given the large tax rebates—from 15% to 3% corporate tax in 2014—they could be). Are there reforms suggested to improve their effectiveness? Are politicians suggesting that the country would be better off without any SEZs?