Policy-makers across developingeconomies are implementing different forms of specialeconomic zones (SEZs): programs intended to catalyzeeconomic growth. The SEZ program is aimed at attractingforeign direct investment (FDI) to increase firm-levelinvestment and improve firm-level productivity by enhancingfirm-level coordination, networks, and innovation. Thepurpose of this operational review is to inform and toidentify and document lessons from the application of thesepolicies across countries and across the World Bank’sproject portfolio. The report reviews the SEZ programs, andthe characteristics and contexts that are associated withthe success of SEZ policies. The report also adds to thegeneral SEZ debate of whether the benefits generated by SEZsare restricted to the firms within the walls of the SEZswith limited social benefit; or whether SEZs eventually leadto spillovers that support structural change generating highsocial benefits. The report is structure as follows: chapterone gives introduction. Chapter two, provides a briefliterature review of SEZ theory and performance. Chapterthree provides an overview of the dataset developed for thiswork. Chapter four presents the econometric estimation usingthe dataset (for the explanatory variables) and nighttimelights data over 5 years as a measure of success (anddependent variable). Finally, chapter five focuses on theWorld-Bank-Group-funded projects that contain an SEZcomponent and assess the factors determining success andfailures of SEZs.
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