Public assistance in the development of special economic zones in ukraine

Lviv Regional Institute of Public Administration, National Academy of Public Administration, Office of the President of Ukraine

Problem setting. Ukraine has suffered enormous economic losses in recent years. The intense decline in key macroeconomic indicators, the collapse of production and the physical destruction of industry in the occupied territories, the high proportion of depressed regions, the rapid decrease in the inflow of foreign investment and the deterioration of the investment climate induce to look for new instruments of economic growth. In world practice, the special economic zones are the powerful instruments for economic growth. Today, the world has about 4,000 special economic zones in 135 countries, which account for more than 70 million jobs. Creation of special economic zones can stimulate investment inflows and accelerate the development of a country. Despite this Ukrainian authorities don’t use the special economic zones. It is unclear, why Ukraine, with its huge need for foreign investment, categorically renounces of using these instruments of investment attraction which are used all over the world. Considering this, the public support of the special economic zones development in Ukraine is relevant.

Recent research and publications analysis. An important contribution to the study of special economic zones was made by: J. Ahrens, L. Benovska, I. Bobukh, V. Borshchevskyi, L. Cherniavska, M. Tsizaryk, S. Ezmale, N. Hrubel, V. Heiets, Yu. Kindzerskyi, K. Likhto, Z. Medzhydov, H. Meng, R. Nallathiha, V. Panov, O. Popovych, K. Redko, M. Shtan, O.Shutova, V. Sidliar, S. Sosnovskykh, S. Tiefenbrun, V. Tkachenko, V. Vasenko, O. Yehorova, I. Zhukovska and others.

Highlighting previously unsettled parts of the general problem. The analysis of literature on this problem has shown that there is no unity of opinion among the scientists regarding the feasibility of the special economic zones restoration in Ukraine. The purpose of the article is to reveal the essence and classification of special economic zones, analyze the international and domestic experience of their functioning, to identify the problems of their operating and to formulate proposals for their restoration in order to improve the investment climate in Ukraine.

Paper main body. It is generally accepted that special economic zones are territories within the state on which special conditions of the business and trade activities are introduced that differ from conditions which operate on the rest of the territory. At the moment in the world practice there is no generally accepted typology of special economic zones. We distinguish the following types of special zones: 1) trade zones which are created for foreign trade intensification; 2) industrial zones which are created for production activity stimulation; 3) service zones which are created to support companies providing financial, tourist and other services; 4) scientific zones which are created for scientific research activation; 5) comprehensive zones which combine the elements of different types of the above mentioned zones.

The purpose of creating special economic zones depends on the economic development of the countries where they are created. In industrialized countries such zones are created to revitalize small and medium-sized businesses in depressed areas. The developing countries create special economic zones for the purpose of attracting foreign investment.

Ukraine also has experience in creating special economic zones. During the period 1998 – 2000 eleven such zones were created in Ukraine. Among the methodological gaps that occurred when creating Ukrainian special economic zones we can distinguish the following: wrong location placement of special economic zones; large number of priority of activities in zones; different tax benefits for different zones; large barriers to entry investment in zones; undeveloped infrastructure in zones. The current government has all levers to solve these problems and restore the functioning of special economic zones in Ukraine.

Conclusions of the research and prospects for further studies. The results of the research presented in the article confirm that special economic zones are a powerful mechanism of accelerated economic development that has been successfully applied in the world. But in Ukraine the process of functioning of special economic zones was ineffective. The current authorities can prevent the emergence of problems in the operation of such zones and restore their functioning in Ukraine. The use of special economic zones can play a stimulating role in the business environment activation and investment attraction in Ukraine.

In the further research we plan to study in detail the industrial parks and clusters in order to improve the investment climate in Ukraine.

  1. Pidorycheva, I. Yu. (2017). SEZam ne vidkryietsia? ZN, Vol. 1130. URL : /sezam-ne-vidkriyetsya-pro-svitoviy-dosvid-vikoristannya-specialnih-ekonomichnih-zon-ta-umovi-za-yakih-yih-instrumentariy -mozhe-stati-pridatnim-dlya-vikoristannya -i-v-ukrayini-html [in Ukrainian].
  2. Panov, V. O. (2016). Chomu v Ukraini boiatsia vidrodzhuvaty SEZ? Forbes. URL : /ua/opinions/1414624-chomu-v-ukrayini-boyatsya-vidrodzhuvati-sez [in Ukrainian].
  3. Csiszarik, M. (2005). Some specific features of European free economic zones. European Integration Studies, Vol. 4(1), рр. 43-52.
  4. Ezmale, S., Rimsane, I. (2014). Promoting the plurilingual awareness in business environment: case of Rezekne Special Economic Zone. Procedia. Social and Behavioral Sciences, Vol. 110, рр. 231-240.
  5. Cherniavska, L. V. (2009). Vilna ta spetsialna ekonomichni zony: problemy poniatiinoho aparatu. Problemy i perspektyvy rozvytku bankivskoi systemy Ukrainy, Vol. 25, pp. 246-253 [in Ukrainian].
  6. Grubel, H. (1982). Towards a theory of free economic zones. Weltwirtschaftliches Archiv, Vol. 118(1), рр. 39-61.
  7. Ahrens, J., Meyer-Baudeck, A. (1995). Special economic zones: shortcut or roundabout way towards capitalism? IntereconomicsVol. 30 (2), рр. 87-95.
  8. Meng, G. (2005). Evolutionary model of free economic zones. Different Generations and Structural Features. Chinese geographical science, Vol. 15(2), рр. 103-112.
  9. Liuhto, K. (2009). Special economic zones in Russia – what do the zones offer for foreign firms? Electronic publications of pan European Institute, Vol. 2, рр. 149-164.
  10. Tiefenbrun, S. (2013). U. S. Foreign Trade Zones of the United States, Free-Trade Zones of the World, and their Impact on the Economy. Journal of International Business and Law, Vol. 12(2), рр. 148-222.
  11. Medzhidov, Z. U. (2016). Zarubezhnyj opyt funkcionirovanija osobyh jekonomicheskih zon. Vestnik Samarskogo gosudarstvennogo jekonomicheskogo universiteta, Vol. 1(135), pp. 29-36 [in Russian].
  12. Zhukovskaya, I. V., Shinkevich, A. I., Yalunina, E. N., Lushchik, I. V., Zhukova, M. A., Mokhova, G. V., Ostanin, L. M. (2016). Features of economic zones regulation in terms of economic instability. International journal of environmental and science education, Vol. 18 (11), рр. 12787-12801.
  13. Sosnovskikh, S. (2017). Industrial clusters in Russia: the development of special economic zones and industrial parks. Russian Journal of Economics, Vol. 3, рр. 174-199.
  14. Nallathiga, R. (2007). Potential of special economic zones in promoting industrial and regional economic development: an analysis. The Journal of Industrial Economics, Vol. 1 (4), рр. 61-77.
  15. Shutova, O. S. (2013). Vilni ekonomichni zony yak riznovyd terytorialnykh podatkovykh zvilnen. Chasopys Kyivskoho universytetu prava, Vol. 1, pp. 157-161 [in Ukrainian].
  16. Pro zahalni zasady stvorennia i funktsionuvannia spetsialnykh (vilnykh) ekonomichnykh zon. № 2673. (1992) [in Ukrainian].
  17. Pro kontseptsiiu stvorennia spetsialnykh (vilnykh) ekonomichnykh zon v Ukraini. № 167. (1994) [in Ukrainian].
  18. Ministerstvo ekonomichnoho rozvytku ta torhivli Ukrainy. (2018). Osnovni pokaznyky po spetsialnykh ekonomichnykh zonakh. URL : [in Ukrainian].
  19. Derzhavna sluzhba statystyky Ukrainy. (2011). Nadkhodzhennia ta osvoiennia investytsii u spetsialnykh (vilnykh) ekonomichnykh zonakh ta na terytoriiakh priorytetnoho rozvytku Ukrainy za investytsiinymy proektamy u 2010 rotsi. Kyiv. 214 p. [in Ukrainian].
  20. Bobukh, I. M. (2003). Stanovlennia i funktsionuvannia spetsialnykh ekonomichnykh zon v Ukraini. (Extended abstract of candidate’s thesis). NAN Ukrainy, Kyiv [in Ukrainian].
  21. Kindzerskyi, Yu. V. (2016). Mozhlyvosti spetsialnykh ekonomichnykh zon u konteksti mizhrehionalnoho vyrivniuvannia ta rozvytku depresyvnykh terytorii. Ekonomika Ukrainy, Vol. 1, pp. 52-71 [in Ukrainian].
  22. Ibid. pp. 52-71.
  23. Heiets, V. M., Semynozhenko, V. P. (2006). Spetsialni ekonomichni zony: chorni diry chy tochky ekonomichnoho zrostannia? URL : economics/spetsialni_ekonomichni_zoni_chorni_diri_chi_tochki_ekonomichnogo_ zrostannya.html [in Ukrainian].
  24. Nadkhodzhennia ta osvoiennia investytsii u spetsialnykh (vilnykh) ekonomichnykh zonakh...
  25. Yehorova, O. O. (2014). Spetsialni ekonomichni zony Ukrainy: rezultaty, problemy ta perspektyvy. Naukovyi visnyk Khersonskoho derzhavnoho universytetu, Vol. 5, Ch. 1, pp. 167-173 [in Ukrainian].
  26. Investytsii zovnishnoekonomichnoi diialnosti Ukrainy. (2016). Kyiv. 44 p. [in Ukrainian].