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#20 - 🌍Special Economic Zones, ✨Barnum Effect

#20 - 🌍Special Economic Zones, ✨Barnum Effect
By Hari • Issue #20 • View online
Hi Friends,
Special Economic Zones
A special economic zone(SEZ) is a designated area in a country with special economic regulations to incentivize foreign direct investment. Usually these incentives are in the form of tax reductions, labour regulations, customs etc.
A SEZ became popular in the mid 20th century. The primary purpose were to attract foreign investments. Now they are being used to attract domestic investments and for eventually encouraging investments outside of the zone as well.
A second order outcome of having a special economic zone that attracts a lot of companies in the same geographical is the there are more chances of cross-pollination. In terms of employees, competence and technology. Synergies like having a large part of supply chains concentrated in a small area is attractive for businesses. It can save costs and both ends of the chain and improve the pace of innovation. A textbook example is the Shenzen Economic Zone. It really found the sweet spot for manufacturing electronic goods and soon dwarfed global supply chains.
The economic activity from a SEZ usually spills over outside of the SEZ too. SEZ that are big enough can eventually have cities built around them to facilitate the labour market and provide better logistical support for the SEZ.
Barnum Effect
Barnum Effect, also known as Forer Effect, is the tendency to take general statements and interpret it from a personal point of view. A very common example where the Barnum Effect is exploited is in horoscopes and fortune telling. You can commonly see sentences like “When something good lands in our lap, we frequently fail to appreciate it, because we immediately begin the process of protecting, coveting, and ultimately hoarding our treasures.” This sentence can have different meaning because as we read it we relate it to our life experiences.
The more personal input you give in the process, even stronger is the effect. Personality tests like MBTI can seem more accurate then they are. Especially if it is combined with confirmation bias. If the tests, for any reason tells you something that you knew or wanted to be true. It is highly likely that you will believe it. People won’t believe or pay attention to general statements that are considered negative.
Hari.

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Hari
By Hari

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