Impact of special economic zones on socioeconomics and local development in Pakistan: Evidence from Allama Iqbal Special Economic Zone, Faisalabad

The purpose of this study was to investigate the impact of SEZ on indigenous peoples’ socioeconomic status and local development in the study area. A quantitative approach to analyzing the socioeconomics of treatment and control groups. A structured questionnaire was designed and a field survey was undertaken to collect primary data from respondents. This study used Principal Component Analysis (PCA) to create a socioeconomic index for two groups: those who sold their agricultural land and those who did not sell, and a two-sample independent t-test was used to determine the influence of SEZ on socioeconomic and local development. The results showed that the compensation amount for the acquired land not only improved the socio-economic living conditions of the indigenous population in short run, but also transformed their type of employment from agriculture to labor work, increased health expenditure, increased household wealth and minor changes in education expenditure and construction effected new houses, most of which is used for child marriage, vehicle purchased and dowary expenses in the special economic zone. This unproductive spending increases in the short term, which in the long run will convert skeikonicity into deprivation. Previous studies focused only on the geopolitics behind the geo-economy and the challenges and success factors for SEZs in Pakistan. This study is unique as it is the first attempt that uses statistical and economic tools to identify the positive and negative impacts of SEZ on the local development in the area. It makes an academic contribution to the literature to improve the knowledge of the effects of these special economic zones on the local development in any area.