Attracting FDI to the Western Balkans: Special Economic Zones and Smart Specialisation Strategies

This paper investigates the role of Special Economic Zones (SEZs) in the Western Balkans in supporting industrial policy for economic development.It shows that Serbia and North Macedonia have both implemented policies to establish networks of SEZs that have attracted a relatively large amount of new foreign direct investment, mainly into the motorcar and components industries.Although many jobs have been created and some improvements in export competitiveness have occurred, there is no evidence of improvements in labour productivity or widespread technology spill-over to local economies.The import intensity of production is extremely high, implying little linkage to local economies.The qualitative interviews further reveal limited linkages between SEZ-based companies and local businesses, limited technology transfer, and a Will