Lotta Moberg | The Truth About Special Economic Zones
“There were probably a lot of brown envelopes on the table involved – they said, okay, have this zone then.”
Timothy Allen speaks with economist Lotta Moberg.
Lotta, author of the leading academic book on special economic zones, joins the podcast to challenge the conventional wisdom around why zones exist, whether they actually work, and what the popular narrative gets wrong.
The conversation opens with Lotta’s framework: political economy and public choice theory, which assumes policymakers are self-interested humans, not benevolent optimizers. This lens reshapes how we understand why governments create zones — and why many underperform yet continue to receive funding.
She pushes back on the “sandbox” narrative around China’s early zones, arguing the origin story was messier and more bottom-up than the neat version usually told. Local businessmen near Hong Kong lobbied corrupt local officials to allow trade — and the central government only endorsed the model years later once results were undeniable.
Key takeaways include: privately developed zones consistently outperform government-run ones; failing zones often attract more subsidies rather than being shut down; and the scholarship on 6,000+ zones worldwide remains surprisingly thin.
The second half shifts to free cities, wealth management strategy, Bitcoin as property rights in the digital realm, cannabis investing as a case study in maturing industries, and why governance by contract rather than birth may be the most important shift of our generation. Lotta declares herself “a total convert” to the contractual governance model after watching Próspera survive political opposition.
Enjoy the conversation.