The impact of Special Economic Zones on Southern Italy

Emanuele Millemaci (University of Messina)
Paolo Mustica (University of Messina)
MIchele Limosani (University of Messina)


Special Economic Zones (SEZs) are geographically delimited area where governments establish special economic rules to attract businesses and investors in underdeveloped regions. Despite SEZs in the world have a long history, the Italian government introduced the SEZ program in 2017 to boost economic and social development of Southern Italy. This paper proposes a first analysis of the impact of Italian SEZs on firms in Southern Italy. To do this, we built a panel dataset containing thousands of Italian businesses observed between 2014 and 2022 and analyzed the impact of being a firm located in a zone or adjacent to a zone on its number of employees. Preliminary results suggest that the SEZ program has been successful so far, since businesses located in a zone and adjacent to a zone have significantly increased their number of employees. We also analyzed the performance of each SEZ, finding that almost all zones positively affected business employment. Moreover, the SEZ program has induced economic specialization: while businesses in the agricultural sector have not made significant changes to employment, the opposite is true for firms in the industrial and service sectors, where the number of employees has increased significantly. Finally, the increase in the number of employees seems to be sustainable over time, since firms located in a zone and adjacent to a zone also increased their revenues. If these results were confirmed in the medium-long term, the SEZ program could represent the beginning of the end of the historic Italian dualism.

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