The socioeconomic impact of Special Economic Zones: Evidence from Cambodia

Abstract

Abstract This study examines the socioeconomic impact of Special Economic Zones (SEZs) in Cambodia—a prominent place‐based policy established in 2005. The paper employs a database on existing and future SEZs in Cambodia with matched household surveys at the district level and documents stylized facts on SEZs in a low‐income country setting. To identify the causal effects of the SEZ program, the paper (i) constructs an alternative control group including future SEZ program participants and districts adjacent to SEZ hosts; and (ii) employs a propensity score weighting technique. The study finds that entry of SEZs increases employment and leads to a decline in income inequality at a district level. Gains in female employment is the key channel explaining rising employment rates. The paper also finds that school drop‐out rates are higher in districts with clusters of multiple SEZs.