The study evaluates the effectiveness of Special Economic Zones (SEZs) as policy instruments aimed at stimulating industrial activity and promoting regional economic development in Italy's underdeveloped Mezzogiorno region. Introduced through Law Decree 91/2017, SEZs offer economic, fiscal, and bureaucratic advantages to attract foreign direct investment and foster economic expansion. Key features include Free Economic Zones that allow duty-free storage and processing of goods, a 50% reduction in corporate income tax, investment tax credits, and simplified administrative procedures. Firms are required to operate within these zones for a minimum of seven years to qualify for benefits.
The study employs a Matching Difference-in-Differences (DiD) model, using the annual value of total fixed assets as a proxy for investment levels, to assess firm behavior and economic performance before and after SEZ implementation. Findings indicate that SEZs have positively impacted high-tech sectors, contributing to reduced regional economic disparities, enhanced local economies, and increased employment. However, the impact varies across regions, with some areas benefiting more than others. The study underscores the importance of refining SEZ policies to involve other significant sectors, such as the food industry, and suggests future regional analyses to explore individual regional effects.
These insights are pertinent to the recently introduced Single SEZ policy in 2024, which extends SEZ benefits to the entire Mezzogiorno area, aiming to promote balanced territorial development and address Italy's persistent North-South economic divide.
