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Place-Based Preferential Policies and Firm Performance

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  • Rami Mikko Ahmed Galal

Abstract

Economic zone programs are generally pursued to improve firms' performance within discrete areas by removing the constraints firms face. Whether or not they succeed in doing so is an empirical question. This paper capitalizes on a unique survey of firms within and outside zones in South Asia to assess the effects of zone programs on firms’ performance in exports, investment, employment, and productivity. Adopting a propensity score matching approach and district-level fixed effects, the paper explores four questions: whether zones support firm performance; whether the type of zone makes a difference, which kinds of public support services matter more, and whether firms inside zones grow faster. The results show that (i) being inside a zone positively affects foreign direct investment and employment, (ii) the effects across zone types are mixed, (iii) infrastructure and trade facilitation play a greater role in firm performance than fiscal incentives and governance facilities, and (iv) firms inside zones grow faster.

Suggested Citation

  • Rami Mikko Ahmed Galal, 2024. "Place-Based Preferential Policies and Firm Performance," Policy Research Working Paper Series 10781, The World Bank.
    • Handle: RePEc:wbk:wbrwps:10781
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