Do Special Economic Zones foster economic development?: Evidence from South Africa

Matthew Amalitinga Abagna, Ronald Davies, Nadine Riedel, Nora Strecker and Biniyam Gezahegn Worku

No wp-2026-91, WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER)

Abstract: This paper evaluates the effectiveness of Special Economic Zones (SEZs) as instruments of economic development in South Africa. Drawing on rich administrative tax data and employing a difference-in-differences identification strategy, we examine how SEZ participation affects firm-level outcomes, including exports, investment, employment, and productivity. Contrary to the common expectation that SEZ participation boosts firm performance, the results suggest that SEZ firms generally underperform their non-SEZ counterparts.

Keywords: Special Economic Zones; Tax policy; Firm performance; Administrative data; Difference-in-differences; Economic development (search for similar items in EconPapers)
Date: 2026
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