Attracting FDI to the Western Balkans: Special Economic Zones and smart specialisation strategies

Will Bartlett, Besnik Krasniqi and Jasmina Ahmetbašić

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: This paper investigates the role of Special Economic Zones (SEZs) in the Western Balkans in supporting industrial policy for economic development. It shows that Serbia and North Macedonia have both implemented policies to establish networks of SEZs that have attracted a relatively large amount of new foreign direct investment, mainly into the motorcar and components industries. Although many jobs have been created and some improvements in export competitiveness have occurred, there is no evidence of improvements in labour productivity or widespread technology spill-over to local economies. The import intensity of production is extremely high, implying little linkage to local economies. The qualitative interviews further reveal limited linkages between SEZ-based companies and local businesses, limited technology transfer, and a lack of appropriate skills among the workforce. In particular, there is insufficient capacity in the motorcar components supply chain. The paper concludes that governments have used SEZ policies as an alternative to regional and local development policies based on smart specialisation. In order to take advantage of the opportunity offered by SEZs, governments in the region should put more effort into developing local supply chains, aligning their policies towards SEZs and smart specialisation in order to leverage the advantages of an increased inflow of direct foreign investment for sustainable economic development in the future.

Keywords: Skills; Smart specialisation; Special economic zones; Supply chains; Technology transfer (search for similar items in EconPapers)
JEL-codes: L52 O38 O52 O57 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2019-12-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published in Croatian Economic Survey, 1, December, 2019, 21(2), pp. 5 - 35. ISSN: 1330-4860

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http://eprints.lse.ac.uk/117486/ Open access version. (application/pdf)

Related works:
Journal Article: Attracting FDI to the Western Balkans: Special Economic Zones and Smart Specialisation Strategies (2019)
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