This study examines the potentials of Special Economic Zones (SEZs) in enhancing economic growth and competitiveness in Pakistan. In doing so, it analyses the experiences and best practices from Pakistan’s neighbouring countries in order to give policy recommendations for an effective SEZ policy for the country. Based on this, it emphasises that, over a short period of time, Pakistan should ensure improvement in business climate in the economic zones. This can be done through improved infrastructure and trade facilitation to attract investment by foreign and domestic firms in the zones. It furthers asserts that based on the successful experiences of other countries, Pakistan can use SEZs as a laboratory for policy experimentation in order to test the impacts of specific policies, which if successful, can later be replicated in other sectors of the economy. Finally, SEZs should generate a trickle-down effect such that it benefits the whole economy, workers and firms outside the zone.