Abstract In this paper, I seek to examine the ways in which the sovereign territoriality of the state has been contested and (re)constructed in relation to globalization and economic liberalization, especially in the context of the East Asian developmental state. In particular, by building on Aiwa Ong's concept of “graduated sovereignty”, I will address how the forms of state regulation and sovereignty can be spatially differentiated or graduated within a national territory, with a focus on the spatial processes of economic liberalization in South Korea. In focusing on a recent globalization project of the Korean government, which aims to develop global hubs of international movement of capital and skilled labor in several localities by designating these “economic free zones”, my analytical focus in this paper is on answering this question: Why and under what political and economic circumstance has the Korean government decided to use this spatial strategy? More specifically, I argue in this paper that the strategy of building “special economic zones” in South Korea is partly a spatial outcome of East Asian “neo-liberalization”, stemming from politically contested interactions between inherited institutional forms and policy frameworks of the developmental state, and the emergent forces of economic liberalization. In other words, the Korean government's project to build “economic free zones” can be considered a strategy of “spatially selective liberalization”; it demonstrates strong properties of path dependency, in which established institutional arrangements constrain the scope and trajectory of neo-liberal reform in South Korea.