Special Economic Zones and Agglomeration Economies, the Ethiopia Experience — Matthew Amalitinga Abagna

Sprecher

Matthew Amalitinga Abagna (University College Dublin)

Abstract

This paper documents the effect of Special Economic Zones(SEZs), a place-based development policy on local economic activities in Ethiopia, using nighttime light, a geocoded measure of district economic activities. Using Difference-in-Difference (DiD) estimation approach, the paper provides evidence showing that districts with SEZs and districts directly bordering SEZs districts experience a significant increase in local economic activities after the SEZs turn on. However, districts adjacent to the commuting districts experience no increase in their economic activities, highlighting that the SEZs spillover effect on local economic activities attenuates with distance to the zone. Also, privately owned Special Economic Zones perform better in driving economic agglomeration in the host districts than state-owned SEZs. However, the spillover effects of state-owned SEZs on the commuting districts are not significantly different from non-state SEZs.

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