THE EFFECT OF SPECIAL ECONOMIC ZONES ON REGIONAL ECONOMIC GROWTH IN INDONESIA: A STAGGERED DIFFERENCE-IN-DIFFERENCES STUDY

Siti Aubrey Salsabila Tisarani Putri, Muhammad Rafi Bakri and Yohanes Rama Adiwicaksana
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Siti Aubrey Salsabila Tisarani Putri: The Audit Board of Indonesia, Indonesia
Muhammad Rafi Bakri: The Audit Board of Indonesia, Indonesia
Yohanes Rama Adiwicaksana: The Coordinating Ministry in Economic Affairs of Indonesia, Indonesia

Journal of Economic Development, 2026, vol. 51, issue 3, 1-17

Abstract: Special Economic Zones (SEZs) in Indonesia are designed to stimulate regional growth and industrial competitiveness through fiscal incentives and infrastructure development. This study evaluates the impact of SEZs establishment on regional economic performance using a Staggered Difference-in-Differences approach across 33 provinces from 2000 to 2023. The results reveal that the estimated effects of SEZs designation are limited in the early years of exposure and become impactful in long run. The analysis also shows heterogeneous treatment effects across cohorts, with some cohorts experiencing stronger and more sustained post-treatment growth, while others exhibit weaker or stagnant responses. These differences may reflect variations in industrial development, infrastructure readiness, and institutional capacity. Overall, the findings highlight the importance of sustained governance and local industrial integration in strengthening the long-term effectiveness of SEZs.

Keywords: Special Economic Zones (SEZs); Regional Economic Growth; Staggered Difference-in-Differences; Structural Transformation; Industrial Agglomeration; Institutional Governance (search for similar items in EconPapers)
JEL-codes: O18 P25 R11 R12 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:ris:jecdev:023658

DOI: 10.35866/caujed.2026.51.3.001

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