Determinants of Investment Attractiveness of Polish Special Economic Zones

Abstract

Objective: The objective of this article is to explain why some Special Economic Zones in Poland have attracted more foreign and domestic investment than others. Research Design & Methods: Referring to the OLI paradigm, we identified 25 variables which might impact the stock of investment in each individual SEZ. They were divided into three groups: zone’s investment climate, investors’ opinions and region-level factors. We used correlation and regression analyses to check dependencies. Findings: The investment climate mattered most. Regional level characteristics were the least important. Foreign investors were more concerned than domestic ones about the location factors we considered. There is clearly a closer correlation between SEZ reputation and the number rather than the value of investment projects. It may mean that small investors pay more attention to the opinions which circulate in business circles and that big companies probably rely on their own evaluation of a SEZ’s investment climate. Implications & Recommendations: Special Economic Zones in less developed parts of Poland can successfully compete for capital if they are well managed. Tax reliefs are secondary for choosing a particular zone. Supply factors count much more. The most important factors for attracting FDI were: outlays on the provision and moderni-sation of zone infrastructure, the number of towns and cities, overall investment attractiveness of voivodeships, as well as labour resources and costs. Contribution & Value Added: Location advantages and their significance for domestic and foreign investors were rarely examined at the SEZ level.

Keywords

• special economic zones
• foreign and domestic investors
• location premises
• investment attractiveness
• investment policy tools
• state aid