Rethinking India's Special Economic Zones

Called Special Economic Zones, India has created several "pockets of posterity" that attract investment with lower taxes, tariff restrictions, high-quality infrastructure and other bonuses for businesses who locate there.

Other developing countries including China are following suit. The U.S. has used them for decades, although they are usually created by local or regional governments.

But in India, SDZs are creating a backlash. Although they have increased foreign domestic investment in the country, farmers and other landowners are fighting back against government efforts to secure property for business interests.

"Considering how thorny the issue has become, the question must be asked: Does India really need them?," opine Harvard Business School professors Laura Alfaro and Lakshmi Iyer, writing in the Christian Science Monitor. "India's growth process has been largely bottom-up: Entrepreneurs have succeeded despite government bureaucracy -- not because of it. The best policy for the government may be to provide the benefits of SEZs -- low tariffs, reasonable taxes, good infrastructure, little red tape -- to all firms in all parts of the country."

Do you agree? Is India's experience part of the greater topic on the role government should play in supporting individual businesses or industries?