SEZ create pockets of greater order and reduced entropy, resembling living organisms

By George ELIOT

Special Economic Zones (SEZ) have something in common with all living things: they represent a temporary reduction in entropy, against an environment with higher entropy.

Entropy as a scientific concept is typically associated with disorder and uncertainty. According to the Second Law of Thermodynamics, the entropy of an isolated system tends to increase over time, meaning that systems naturally move towards greater disorder and less usable energy.

However, living things exists as pockets of lower entropy, which indicates greater order and less randomness. Therefore the corresponding higher available energy within living organisms allows this energy to be used for work (e.g. for motion and for biological processes). Whereas the rest of the environment (e.g. the surface of the Earth or open space) tends to converge towards higher entropy, i.e. more disorder and less usable energy. 

In a similar way, a successful SEZ has lower entropy, which means it is more orderly than its surrounding environment and its energy is more concentrated and available to be channelled into useful activities (construction, manufacturing, services). While the rest of the country typically forms a system with high entropy, i.e. more randomness and dispersed energy that is less available for work. 

SEZ derive their external "free energy" and internal "orderliness" from three sources: 

A) The institutional drive of the founders: national or local governments and founding investors who shape the rules of the SEZ.

B) The capital inputs of investors and the technology and knowhow that comes with capital.

C) The labour inputs of the (typically more qualified) workers who are attracted to the SEZ from other areas.

The great thing about a SEZ is that its energy tends to trickle down (or ripple across) its surrounding area, thus stimulating economic activity beyond its boundaries. While the institutional orderliness (better rule of law, investment and intellectual property protection, etc.) sets an example to the rest of the country / region and helps institutionalise best practice.

The laws of physics also exemplify why countries with strong rule of law and a higher degree of orderliness need SEZ to a much lower extent. In nature, temperature transfer can only occur from a warmer body to a colder body. For a SEZ to be needed, it needs to operate as a "warmer" object in a "colder" environment. If a SEZ cannot be much more different than its surrounding area, there is no real need for it to be given "special" status in the first place.

The entropy of a system (Source: Wikipedia)