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Special Economic Zones - 20 years later

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  • Camilla Jensen
  • Marcin winiarczyk

Abstract

In this paper we undertake an ex-post evaluation of whether the special economic zones (SEZs) introduced in Poland in 994 have been successful in meeting regional development objectives. We evaluate the policy on as many of its objectives as possible: employment creation, business creation (which includes attracting foreign direct investment), income or wage effects, and environmental sustainability. We use different panel data methods to investigate this question at the powiat (nuts4 or something similar to a commune) and gmina (nuts5 or something similar to a village) levels in Poland during the 995-20 period. It is also possible to include numerous controls to reduce the problem of the omitted variables bias such as education level, dependency rates, state ownership, general subsidies and whether the area is urban or rural. Our results indicate that SEZs in Poland have been successful in a number of their objectives such as private business creation. The positive effect of the policy however mainly comes through foreign direct investment (FDI), whereas the effects on e.g. investment and employment are small or insignificant. In other areas, such as securing higher income levels and locking firms into the sustainability agenda through the adoption of green technologies and reduced air pollution, we find only a small positively moderating effect of the policy on what are traditionally economically disadvantaged areas in Poland that used to be dependent on the socialist production model. Hence, despite high levels of FDI, the zones policy has not managed to overcome the legacy of backwardness or lagging regions. The main policy implication of the paper is that SEZs may be successful in stimulating activity in the short run but the policy must be seen as one of necessary temporality and can therefore not stand alone. Before launching SEZs, policymakers must have plans in place for follow up measures to ensure the longer term competitiveness and sustainability implications of such an initiative. There is a need to understand the connection between the specific incentive schemes used (in this particular case tax incentives were used) and the kinds of firms and activities they attract, including the behavioral models that those incentives promote.

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Bibliographic Info

Paper provided by CASE-Center for Social and Economic Research in its series CASE Network Studies and Analyses with number 0467.

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Length: 35
Date of creation: Feb 2014
Date of revision:
Handle: RePEc:sec:cnstan:0467

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Related research

Keywords: Special Economic Zones; Panel Data; Policy Evaluation; Regional Development; Reindustrialization; Competitiveness;

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  1. Crozet, M. & Mayer, T. & Micchielli, J.L., 2000. "How Do Firms Agglomerate? A Study of FDI in France?," Papiers d'Economie Mathématique et Applications 2000.50, Université Panthéon-Sorbonne (Paris 1).
  2. Sandy Dall'erba & Julie Le Gallo, 2003. "Regional Convergence And The Impact Of European Structural Funds Over 1989-1999: A Spatial Econometric Analysis," Urban/Regional 0310005, EconWPA, revised 12 Feb 2004.
  3. Lisa De Propris & Nigel Driffield, 2006. "The importance of clusters for spillovers from foreign direct investment and technology sourcing," Cambridge Journal of Economics, Oxford University Press, vol. 30(2), pages 277-291, March.
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