What draws investment to Special Economic Zones? Lessons from developing countries

Susanne Frick and Andrés Rodríguez-Pose

No 2304, Papers in Evolutionary Economic Geography (PEEG) from Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography

Abstract: Special Economic Zones (SEZs) are a popular policy tool for the promotion of economic development. However, questions remain about their economic contribution and about what aspects of SEZ policies are most relevant to investors. This article sheds light on these issues by comparing SEZs across Africa, Asia and Latin America. We find that, while investment decisions by foreign companies are driven by market access, political stability and low labour costs, adequate SEZ policies facilitate the attraction of investment. A good industrial infrastructure together with a strategic location and service provision within the zones draw investment. Fiscal incentives, by contrast, have a limited influence on investment decisions.

Keywords: Special Economic Zones; inward investment; industrial policy; developing countries; FDI location decision (search for similar items in EconPapers)
JEL-codes: F21 L52 O14 O24 (search for similar items in EconPapers)
Date: 2023-02, Revised 2023-02
New Economics Papers: this item is included in nep-dev, nep-fdg, nep-int and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Journal Article: What draws investment to special economic zones? Lessons from developing countries (2023)
Working Paper: What draws investment to Special Economic Zones? Lessons from developing countries (2023)
Working Paper: What draws investment to special economic zones? Lessons from developing countries (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:egu:wpaper:2304

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