Impact of Special Economic Zones on Export Diversification in Sub-Saharan Africa

Abstract Export diversification is a major concern for policymakers in Sub-Saharan Africa (SSA). Over the past 30 years, many countries of the region have adopted special economic zone (SEZ) programs with the aim of fostering industrial development and export-led growth. By offering various pro-investment incentives, SEZs are expected to contribute to the improvement of the business climate and attract firms from traditional and new sectors. This study analyses the impact of SEZ adoption on overall export diversification and on extensive and intensive margins in the SSA region. For that purpose, a difference-in-differences approach has been implemented on a panel of 32 SSA countries covering the period 1970–2014. It appears that SEZ adoption has contributed to balancing export shares more equally among traditional sectors, resulting in greater export diversification in these countries. However, this policy tool has appeared to be less effective in fostering the creation of new activity sectors.