KCG Research: Special Economic Zones Promote Firm Performance in Ghana

China’s prominent success in fostering economic growth by setting up special economic zones (SEZ) with preferential economic policies has motivated many countries in the world to also build free trade zones or special economic zones and implement economic liberalizing policies on site.

Previous studies on SEZ found overall positive effects on firm productivity, employment and investment, but evidence for African firms has been limited. Focusing on Ghana, Prof. Dr. Charles Godfred Ackah (KCG External Research Fellow; University of Ghana) with his colleagues at the University of Ghana, Prof. Dr. Robert Darko Osei and Baah Aye Kusi, Ph.D., conducted a study on 328 Ghanaian firms between 2018 and 2021. Ghana has a unique SEZ policy with which firms are able to operate both within and outside the SEZs, irrespective of whether they are registered in an SEZ or not.

They find evidence showing that being registered in a SEZ has a significant positive effect on firm performance, including positive effects on labor productivity, profitability, and revenue generation. Some positive impact on firm performance is also found for firms not registered in a SEZ but operating inside one. In contrast, negative effects on firm performance are found for firms that are not registered in and are operating outside the SEZs.

The journal article “Special economic zone dynamics and firm performance: Evidence from an emerging economy” by Charles Godfred Ackah, Robert Darko Osei, Baah Aye Kusi (2024) was published in the Journal “Management and Decision Economics” (Vol. 45 (6), pp. 3834–3851) and is available here.