There is no doubt that governance has become the overarching framework for designing and implementing contemporary economic policies. It no longer focuses solely on regulating administrative performance but has evolved into an integrated system that governs the relationship between the three pillars: the state, the market, and society.
The significance of this concept becomes even greater when examined in the context of Special Economic Zones (“SEZs”) and Exclusive Economic Zones (“EEZs”), given the exceptional nature of these two regimes – whether through their partial departure from national regulatory rules or their direct connection to International Law frameworks. Accordingly, any serious approach to these zones cannot be separated from a thorough analysis of the governance system that frames them, as it serves as a true guarantee for achieving sustainable development and establishing economic sovereignty.
Historically, SEZs emerged as tools to encourage foreign direct investment by offering tax and customs incentives and simplifying administrative procedures. However, recent literature – especially UNCTAD reports – indicates a fundamental shift in the philosophy behind these zones: from a mere “exemption areas” to “policy platforms” used to test broader regulatory and economic reforms. The UNCTAD World Investment Report of 2019 confirmed that the success of economic zones is no longer measured by the extent of incentives, but by their ability to integrate with the national economy, enhance value chains, and facilitate technology transfer.
Accordingly, governance has become the decisive factor in shifting from the concept of mere “attraction” to a model of “regulated development”.
In this context, a thorough analysis requires distinguishing between two distinct legal natures for each type of the aforementioned economic zones:
- Special Economic Zones (SEZs). Subject to the full sovereignty of the state, yet they operate under a distinct legal framework aimed at accelerating procedures, reducing regulatory burdens, and enhancing the business environment. This, in turn, necessitates strict legal controls to ensure that such exceptions do not become loopholes for evasion or breaches of the principles of economic justice.
- Exclusive Economic Zones (EEZs). Founded on a different legal basis, namely the United Nations Convention on the Law of the Sea of 1982. This convention grants coastal states sovereign rights to exploit natural resources within a defined geographical scope, but these rights do not amount to full sovereignty. Consequently, this legal characterization imposes dual obligations: domestically, in terms of regulating economic exploitation; and internationally, regarding the protection of the marine environment and cooperation with other states.
Based on this distinction, a need for an advanced model of multi-level governance in EEZs emerges, where responsibilities are distributed between: the national level, which is responsible for enacting legislation, establishing independent regulatory bodies, and imposing financial and administrative control; and the international level, which requires adherence to international agreements, submission of reports, and coordination with neighboring countries, especially regarding the management of shared resources.
In both models, effective governance cannot be envisioned without relying on a set of fundamental pillars that form its core structure:
- Transparency, described as a cornerstone, is not limited to public disclosure; it rather extends to publishing investment contracts, disclosing incentives, and providing access to financial data – actions which specialized organizations consider a central tool for combating corruption and strengthening investor confidence.
- Accountability, remains an essential requirement for ensuring proper performance. This is achieved through parliamentary control, empowering independent regulatory bodies, and providing mechanisms for judicial and administrative appeals – which reinforces the rule of law.
- Principle of Participation, alternatively, holds particular significance as it requires the involvement of local communities, civil society, and the private sector to ensure balance between economic objectives and social considerations.
- Institutional Efficiency, alongside all the above, is essential to achieve through genuinely independent authorities, a clear separation between the regulatory body and the operator, and reliance on professional competence.
- Legal Stability, whose importance is an essential condition for attracting long-term investment.
Despite the clarity of these pillars, practical implementation faces complex structural challenges. Most important one is the weak integration of some zones with the national economy, which can turn them into isolated economic islands. In addition, there are environmental risks associated with industrial activities, as well as geopolitical challenges that arise, especially in EEZs, where maritime disputes may arise and hinder resource investment.
On a related note, the political dimension of governance cannot be overlooked, since the system’s effectiveness is closely linked to the nature of the political regime and its institutions’ maturity. Hence, in environments suffering from institutional weakness, economic zones may become tools for rent distribution or platforms serving the interests of influential actors, which can undermine development objectives. Therefore, successful governance requires national consensus on these zones’ goals, a legal framework immune against politicization, and a genuine political will supporting reform.
At the practical level, a need to develop stricter governance models arises in Arab countries. This is evident in the case of Lebanon, where the development of economic zones – whether on land or offshore – requires the adoption of precise legislation, the establishment of independent bodies, assurance of transparency in contracts, and rational management of oil revenues, especially within the legal framework established by the Offshore Petroleum Resources Law No. 132/2010.
In conclusion, the governance of SEZs and EEZs is no longer merely a regulatory option, but a strategic necessity dictated by the unique nature of these zones. It is this governance that ensures a balance between economic openness and national sovereignty, as well as between investment attractiveness and the public interest. Hence, the more countries succeed in establishing the principles of transparency, accountability, participation, efficiency, and legal stability, the more they can transform these areas into genuine tools for sustainable development, and into a fundamental pillar of a national economy that is competitive and capable of a balanced integration with the global economy.