The extensive and intensive margins of employment resulting from Poland’s SEZ policy

The paper evaluates Poland’s special economic zones (SEZ) policy with a focus on
the emergence of market-based business clusters. A structural model of regional growth is estimated to measure and assess the impact of the SEZs as a ‘helping hand’ on the extensive and intensive margins of employment. Literature on business clusters suggest it would require them to grow on both margins simultaneously to be viable; attracting more firms and making each firm dependent on the success of its regional peers. However, the policy went through different phases and the priorities of policy-makers as well as zone managers shifted over time. For the designated Zone Management Companies (ZMCs) the results have been modest for the extensive margin. The main outcome of the policy has been on the intensive margin. In part,
this result is expected due to the large firm bias inherent in the policy, and the selection bias owing to the prior location of state owned enterprises.