Special Economic Zones (SEZs)- designated areas where governments offer incentives such as tax breaks, infrastructure development, and regulatory easing to attract foreign and domestic investment have risen significantly in Africa in the last two decades. Despite their increasing prevalence, the impact of SEZs in Africa has yet to be comprehensively studied due to data unavailability. Existing research primarily consists of descriptive studies of a single SEZs focusing on traditional outcomes such as the number of firms, FDI attraction, and employment generation. These studies, while informative, lack the empirical rigour to fully understand the effects of SEZs. This thesis addressed this literature gap by examining SEZs' localised economic, welfare and health impacts. The study uses nighttime light as a proxy for sub-national economic activity and links the Demographic and Health Survey (DHS) data with SEZ data in ten African countries. The Difference-in Difference estimates suggest that, on average, districts with SEZs in Ethiopia saw an increase of 0.06 standard deviation of the average nighttime light relative to the country's average after the establishment of the SEZs. The impact varies with the SEZ type. SEZs with larger land areas and those operating in sectors other than textiles, garments, and the leather industry tend to generate more economic activities in the SEZ districts. The estimated effect is also positive and significant for publicly managed SEZs, while positive but insignificant for privately managed SEZs. Drawing on the DHS data, the second part of the thesis suggests that households residing within 10 km of an SEZ experienced an increase of 0.25 standard deviation of the wealth index relative to the country average after the establishment of the SEZ in ten African countries. The magnitude of the effect is equivalent to owning a computer in Nigeria in 2008. The effect is not driven by residential sorting and is accompanied by increased access to household utilities, higher consumption of durable goods and a shift away from agricultural activities, suggesting that SEZs drive urbanisation in their neighbourhood. The final part evaluates the link between SEZ establishment and the incidence of anemia—a health condition associated with exposure to toxic materials in the air among women living near SEZs in three African countries. The results indicate that the establishment of SEZs does not have a statistically significant impact on anemia among women aged 15-45 living within 30 km of an SEZ. These results persist even when employing alternative estimation strategies, suggesting that SEZs do not potentially cause anemia in their neighbourhood.

This paper provides empirical evidence on the impact of a prominent placebased policy - Special Economic Zones (SEZs) - on the economic well-being of African households. We compile a novel dataset on repeated cross-sections of households living in various distance bands around SEZs in 10 African countries over the period of 1990 to 2020. Exploiting time variation in SEZ establishment, the estimation yields that households in the vicinity of SEZs become significantly wealthier compared to the national average after SEZs are established. The effect is most pronounced for households within 10 km and decays rapidly with distance. We show that this result is not driven by the residential sorting of wealthier households in SEZ neighbourhoods. The rise in wealth is strongest towards the middle of the wealth distribution and goes hand in hand with increased access to household utilities, higher consumption of durable goods, higher levels of education, and a shift away from agricultural activities - patterns that we interpret as indicative of an urbanization trend and the strengthening of the middle class.

Do Special Economic Zones (SEZs) increase local economic activities in developing countries? This paper explores this question by examining the aggregate district economic effects of SEZs, a place-based development policy in Ethiopia. The study relies on time and district variation in the establishment of SEZs to evaluate the within-district changes in nighttime light, a proxy for district economic activities. The Difference-in-Difference estimates show an increase in the average nighttime light of SEZs districts after the SEZs became operational. The effect varies with the SEZs type. SEZs with bigger land sizes and SEZs that operate in sectors other than textiles, garment and the leather industry tend to generate more economic activities in the SEZs districts. The impact is also positive and significant for publicly managed SEZs relative to privately managed SEZs. The study further explores whether SEZs generate spillover effects on the economic activities of districts bordering the SEZs districts. Overall, there is no consistent evidence that the policy has any significant effect on the economic activities of the SEZs commuting districts.