Spatial impact of entrepreneurial zones: firm, city, and inter city evidence

Stojcic, Nebojsa and Pylak, Korneliusz and Jurlina Alibegovic, Dubravka (2022): Spatial impact of entrepreneurial zones: firm, city, and inter city evidence. Forthcoming in: Regional Studies

Abstract

We investigate the impact of a decade-long large public entrepreneurial infrastructure investment programme in an emerging European economy. Using a unique dataset, we examine the short-run firm, city and inter-city effects of entrepreneurial zones (EZs). EZs have a positive impact on business investment, sales and especially export revenues of firms located within them. Positive economic effects of EZs are limited on host and neighbouring towns and cities, decrease with distance and eventually become negative. This points to the localised nature of EZs effects and their potential for spatial redistribution and clustering of economic activity.

• Item Type: MPRA Paper
• Language: English
• Keywords: Entrepreneurial zones; spillover effects; firm performance; exports; economic incentives; emerging economies
• Subjects: L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L26 - Entrepreneurship; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O12 - Microeconomic Analyses of Economic Development; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R3 - Real Estate Markets, Spatial Production Analysis, and Firm Location > R38 - Government Policy

References

Acs, Z. J., Stam, E., Audretsch, D. B., and O’Connor, A. (2017). The lineages of the entrepreneurial ecosystem approach. Small Business Economics, 49(1), 1–10.

Aggarwal, A. (2012). SEZ-Ied Growth in Taiwan, Korea, and India Implementing a Successful Strategy. Asian Survey, 52(5), 872–899.

Aggarwal, A. (2019). Leveraging SEZs for Regional Integration in ASEAN A Synergistic Approach. Asian Survey, 59(5), 795–821.

Alibegovic, D. J., Bakaric, I. R., and Slijepcevic, S. (2019). Impact assessment of entrepreneurial zones on local economic outcomes. Economic Research-Ekonomska Istrazivanja, 32(1), 3112–3127.

Ambroziak, A. A., and Hartwell, C. A. (2018). The impact of investments in special economic zones on regional development: The case of Poland. Regional Studies, 52(10), 1322–1331.

Amendolagine, V., Boly, A., Coniglio, N., Prota, F., and Seric, A. (2013). FDI and Local Linkages in Developing Countries: Evidence from Sub-Saharan Africa. World Development, 50(C), 41–56.

Asheim, B., Smith, H. L., and Oughton, C. (2011). Regional Innovation Systems: Theory, Empirics and Policy. Regional Studies, 45(7), 875–891.

Audretsch, D. B., and Belitski, M. (2017). Entrepreneurial ecosystems in cities: Establishing the framework conditions. Journal of Technology Transfer, 42(5), 1030–1051.

Audretsch, D. B., and Belitski, M. (2019). Science Parks and Business Incubation in the United Kingdom: Evidence from University Spin-Offs and Staff Start-Ups. In S. Amoroso, A. N. Link, and M. Wright (Eds.), Science and Technology Parks and Regional Economic Development: An International Perspective (pp. 99–122). Springer International Publishing.

Audretsch, D. B., and Belitski, M. (2021). Towards an entrepreneurial ecosystem typology for regional economic development: The role of creative class and entrepreneurship. Regional Studies, 1–22.

Bartlett, W., Krasniqi, B., and Ahmetbasic, J. (2019). Attracting FDI to the Western Balkans: Special Economic Zones and Smart Specialisation Strategies. Croatian Economic Survey, 21(2), 5–35.

Billings, S. (2009). Do Enterprise Zones Work?: An Analysis at the Borders. Public Finance Review, 37(1), 68–93.

Boarnet, M. G. (2001). Enterprise Zones and Job Creation: Linking Evaluation and Practice. Economic Development Quarterly, 15(3), 242–254.

Braeutigam, D., and Tang, X. (2014). “Going Global in Groups”: Structural Transformation and China’s Special Economic Zones Overseas. World Development, 63, 78–91.

Buckley, P.J., Pass, C.L. and Prescott, K. (1988). Measures of international competitiveness: A critical survey. Journal of Marketing Management, 4(2), 175-200

Chepurenko, A., Kristalova, M., and Wyrwich, M. (2019). Historical and Institutional Determinants of Universities’ Role in Fostering Entrepreneurship. Foresight and Sti Governance, 13(4), 48–59.

Ciccone, A., and Hall, R. E. (1996). Productivity and the Density of Economic Activity. The American Economic Review, 86(1), 54–70.

Cieslik, A. (2005). Regional characteristics and the location of foreign firms within Poland. Applied Economics, 37(8), 863–874.

Ciżkowicz, P., Ciżkowicz-Pękała, M., Pękała, P., and Rzońca, A. (2017). The effects of special economic zones on employment and investment: A spatial panel modeling perspective. Journal of Economic Geography, 17(3), 571–605.

Dawid, H., Harting, P., and Neugart, M. (2018). Cohesion policy and inequality dynamics: Insights from a heterogeneous agents macroeconomic model. Journal of Economic Behavior and Organization, 150, 220–255.

Delgado, M. (2020). The co-location of innovation and production in clusters. Industry and Innovation, 27(8), 842–870.

Delgado, M., Porter, M. E., and Stern, S. (2014). Clusters, convergence, and economic performance. Research Policy, 43(10), 1785–1799.

Delgado, M., Porter, M. E., and Stern, S. (2016). Defining clusters of related industries. Journal of Economic Geography, 16(1), 1–38.

Delgado, M., and Zeuli, K. (2016). Clusters and Regional Performance: Implications for Inner Cities. Economic Development Quarterly, 30(2), 117–136.

Devereux, M. P., Griffith, R., and Simpson, H. (2007). Firm location decisions, regional grants and agglomeration externalities. Journal of Public Economics, 91(3), 413–435.

Enflo, K., Henning, M., and Schon, L. (2014). Swedish Regional GDP 1855–2000: Estimations and General Trends in the Swedish Regional System. Research in Economic History, 30, 47–89.

Engman, M., Onodera, O., and Pinali, E. (2007). Export Processing Zones: Past and future role in trade and development. In OECD Trade Policy Working Paper (Vol. 53, pp. 1–60).

Frick, S. A., and Rodríguez-Pose, A. (2019). Are special economic zones in emerging countries a catalyst for the growth of surrounding areas? Transnational Corporations, 26, 75–94.

Frick, S. A., and Rodríguez-Pose, A. (2021). Special economic zones and sourcing linkages with the local economy: Reality or pipedream? European Journal of Development Research, In Press, 1–26.

Frick, S. A., Rodriguez-Pose, A., and Wong, M. D. (2019). Toward Economically Dynamic Special Economic Zones in Emerging Countries. Economic Geography, 95(1), 30–64.

Fritsch, M. (2013). Handbook of research on entrepreneurship and regional development: National and regional perspectives. Edward Elgar.

Fritsch, M., and Storey, D. J. (2014). Entrepreneurship in a Regional Context: Historical Roots, Recent Developments and Future Challenges. Regional Studies, 48(6), 939–954.

Fritsch, M., and Wyrwich, M. (2017). The effect of entrepreneurship on economic development-an empirical analysis using regional entrepreneurship culture. Journal of Economic Geography, 17(1), 157–189.

Givord, P., Quantin, S., and Trevien, C. (2018). A long-term evaluation of the first generation of French urban enterprise zones. Journal of Urban Economics, 105, 149–161.

Glass, A. J., and Saggi, K. (2002). Multinational Firms and Technology Transfer. The Scandinavian Journal of Economics, 104(4), 495–513.

Guerzoni, M. and Raiteri, E. (2015). Demand-side vs. supply-side technology policies: Hidden treatment and new empirical evidence on the policy mix. Research Policy, 44(3), 726-747.

Henderson, J. V. (2003). Marshall’s scale economies. Journal of Urban Economics, 53(1), 1–28.

Iammarino, S., Rodriguez-Pose, A., and Storper, M. (2019). Regional inequality in Europe: Evidence, theory and policy implications. Journal of Economic Geography, 19(2), 273–298.

Imbens, G.W. and Wooldridge, J.M. (2009). Recent developments in the econometrics of program evaluation. Journal of Economic Literature, 47(1), 5-86.

Jenkins, M., and Arce, R. (2016). Do backward linkages in export processing zones increase dynamically? Firm-level evidence from Costa Rica. Journal of Business Research, 69(2), 400–409.

Jensen, C. (2018). The employment impact of Poland’s special economic zones policy. Regional Studies, 52(7), 877–889.

Kokocinska, M., and Puziak, M. (2018). Regional Income Differences and Their Evolution after EU Accession. The Evidence from Visegrad Countries. Journal of Competitiveness, 10(4), 85–101.

Lauridsen, L. S. (2004). Foreign Direct Investment, Linkage Formation and Supplier Development in Thailand during the 1990s: The Role of State Governance. The European Journal of Development Research, 16(3), 561–586.

Lee, Y.-S. (1999). Labor Shock and the Diversity of Transnational Corporate Strategy in Export Processing Zones. Growth and Change, 30(3), 337–365.

LeSage, J. P., and Pace, R. K. (2009). Introduction to spatial econometrics. London: CRC Press.

Lin, P., and Saggi, K. (2005). Multinational firms, exclusivity, and the degree of backward linkages. Deutsche Bundesbank Discussion Paper Series 1: Economic Studies, 10.

Liu, Z. (2002). Foreign direct investment and technology spillover: Evidence from China. Journal of Comparative Economics, 30(3), 579–602.

Liu, Z. (2008). Foreign direct investment and technology spillovers: Theory and evidence. Journal of Development Economics, 85(1), 176–193.

Lynch, D., and Zax, J. S. (2010). Incidence and Substitution in Enterprise Zone Programs: The Case of Colorado. Public Finance Review, 39(2), 226–255.

Marshall, A. (1890). Principles of economics (Vol. 1). Macmillan and Co.

Milanovic, B., Lindert, P. H., and Williamson, J. G. (2010). Pre‐Industrial Inequality. The Economic Journal, 121(551), 255–272.

Moberg, L. (2015). The political economy of special economic zones. Journal of Institutional Economics, 11(1), 167–190. Cambridge Core.

Moberg, L. (2017). The Political Economy of Special Economic Zones: Concentrating Economic Development. In Political Economy of Special Economic Zones: Concentrating Economic Development (pp. 155–162). Routledge.

Montinola, G., Qian, Y., and Weingast, B. R. (1995). Federalism, Chinese Style: The Political Basis for Economic Success in China. World Politics, 48(1), 50–81. Cambridge Core.

Neumark, D., and Kolko, J. (2010). Do enterprise zones create jobs? Evidence from California’s enterprise zone program. Journal of Urban Economics, 68(1), 1–19.

Ng, M. K., and Tang, W. S. (2004). The role of planning in the development of Shenzhen, China: Rhetoric and realities. Eurasian Geography and Economics, 45(3), 190–211.

O’Keefe, S. (2004). Job creation in California’s enterprise zones: A comparison using a propensity score matching model. Journal of Urban Economics, 55(1), 131–150.

Ottaviano, G. I. P., and Puga, D. (1998). Agglomeration in the Global Economy: A Survey of the ‘New Economic Geography.’ The World Economy, 21(6), 707–731.

Pamic, R. K., and Belullo, A. (2018). Investments’ background of entrepreneurial zones in Croatia. Economic Research-Ekonomska Istrazivanja, 31(1), 1590–1606.

Rodriguez-Pose, A., and Wilkie, C. (2019). Strategies of gain and strategies of waste: What determines the success of development intervention? Progress in Planning, 133, UNSP 100423.

Rosés, J. R., and Wolf, N. (2019). The Economic Development of Europe’s Regions: A Quantitative History since 1900 (1st ed.). Routledge.

Schindler, S., and Kanai, J. M. (2019). Getting the territory right: Infrastructure-led development and the re-emergence of spatial planning strategies. Regional Studies.

Sosnovskikh, S. (2017). Industrial clusters in Russia: The development of special economic zones and industrial parks. Russian Journal of Economics, 3(2), 174–199.

Spigel, B. (2017). The Relational Organization of Entrepreneurial Ecosystems. Entrepreneurship Theory and Practice, 41(1), 49–72.

Stam, E. (2015). Entrepreneurial Ecosystems and Regional Policy: A Sympathetic Critique. European Planning Studies, 23(9), 1759–1769.

Stam, E., and van de Ven, A. (2021). Entrepreneurial ecosystem elements. Small Business Economics, 56(2), 809–832.

Stojcic, N., and Aralica, Z. (2018). (De)industrialisation and lessons for industrial policy in Central and Eastern Europe. Post-Communist Economies, 30(6), 713–734.

Stojcic, N., Srhoj, S. and Coad, A. (2020). Innovation procurement as capability building: Evaluating innovation policies in eight Central and Eastern European countries. European Economic Review, 121,

Stojcic, N. and Orlic, E. (2020). Spatial dependence, foreign investment and productivity spillovers in new EU member states. Regional Studies, 54(8), 1057-1068.

Vujanovic, N., Stojcic, N. and Hashi, I. (2021). FDI spillovers and firm productivity during crisis: Empirical evidence from transition economies. Economic Systems, 45(2).

Wang, C. C., Lin, G. C. S., and Li, G. (2010). Industrial clustering and technological innovation in China: New evidence from the ICT industry in Shenzhen. Environment and Planning A, 42(8), 1987–2010.

Wang, J. (2013). The economic impact of Special Economic Zones: Evidence from Chinese municipalities. Journal of Development Economics, 101, 133–147.

Wilder, M. G., and Rubin, B. M. (1996). Rhetoric versus Reality: A Review of Studies on State Enterprise Zone Programs. Journal of the American Planning Association, 62(4), 473–491.

Wurth, B., Stam, E., and Spigel, B. (2021). Toward an Entrepreneurial Ecosystem Research Program. Entrepreneurship Theory and Practice, 00(0), 1–50.

Yeung, Y., Lee, J., and Kee, G. (2009). China’s Special Economic Zones at 30. Eurasian Geography and Economics, 50(2), 222–240.