This summer the Italian government approved the South Decree Law. What is that? It is a Legislative Decree that includes several measures to improve the competitiveness of the Southern Italy aiming to reduce the gap with the Northern boosting so the whole national economy.

One measure highlights my attention. The Government has introduced the Special Economic Zone (SEZ) in our system.  A SEZ is a physical area where the companies settled in benefit a special administration regime, like tax exemption, and an easy access to logistics facilities.

Italy is last to introduce SEZs in temporal order. The first SEZ established was Limerick (Ireland) in 1959. Now in the world exist 2700 SEZs! The most famous are Shanghai in China, Dubai in Emirates and Tangier in Morocco.  In Europe, there are 70 SEZs, 14 of that are instituted in Poland. From this point of view, Poland is a very interesting case history, because they have introduced a corporate income tax exemption, which stands between 25-55%, for companies that invest in Poland SEZ.

In Italy, the regions considered by the Decree are Campania, Puglia, Basilicata, Abruzzo, Molise, Calabria, Sicily and Sardinia. The Decree considers at least 2 SEZs for each region, 200M € of investment in three years, and fiscal advantages for the companies that invest directly in the region. The first SEZ would be established in Campania at the end of this year around the areas of Naples and Salerno.

Why SEZs are so important? They seem the magic key to boost the economic growth of a country. Their special system of rules creates the right environment where the magic can happen. A SEZ attracts investments from bordering regions and from abroad. These investments make up a virtuous circle. From one side the companies that arrive bring into the area new opportunities like new business, innovations and jobs; from the other side the existing companies and workforce can learn from the incumbents improving themselves. It is a win-win relationship for all actors, since the competitiveness of the area results enhanced.

In order to do that explained above, it is necessary that all the components at macroeconomic level work properly. I am referring to infrastructures, politics and finance system. These elements are the main structure of a country. They are like a house that lets a family to live in. Looking at Italy, the Government is trying to reduce national historical lacks with several structural reforms that mainly concern public administration, logistics facilities, infrastructures and judicial system.

Special economic zones seem an easy solution to the economic growth of a country, but this solution does not work always. For example, there are several failures of SEZs founded into developing countries due to the technological gap between foreign companies and local ones. This distance has made not possible to transfer the knowledge from one part to another so only the foreign company has gained benefit from the relationship. In conclusion, to make a SEZ a success, it is important to have a little gap between the parties involved and that all happens in a proper macroeconomic environment.