In a recent comment, Anirudh wrote: “I notice that the RISC model is in contrast to the development of SEZs( Special Economic Zones), where the focus is on developing certain areas, and giving them special privileges like tax cuts, etc… What do you think about SEZs, which were originally conceived as engines of economic growth? Should we have more of them?”

The RISC model is indeed distinct from “Special Economic Zones”. The RISC model is immersed in the prevailing economic rules. RISC is about what can be done under prevailing rules. SEZs are special, by definition. They have special rules.

I keep insisting that outcomes are a result of rules which govern economic activities — what’s allowed, what’s mandated, what’s prohibited. As I wrote in a recent post, “People as individuals are fairly indistinguishable across the world, save for their history, their culture, the geographies and so on. But as groups, their destinies are astonishingly diverse. I believe that this divergence is due to different set of rules. Rules and norms matter enormously.” Continue reading “SEZ”

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