Special Economic Zones as Instruments of Industrial Policy: The Ethiopian Experience

Abstract

Ethiopia has integrated Special Economic Zones (SEZs), named Industrial Parks, as the central element of its industrial policy over the past decade. This study investigates the Ethiopian experience with SEZs with a focus on the interaction of state actors with non -state actors including investors and labours in the development of its industrial parks. The central objective of the paper is to investigate how state actors and institutions evolved to shape and structure the deployment of Industrial Parks as an instrument of industrial policy in Ethiopia. The research is qualitative and based on secondary data and documentary evidence including published literature, government policy documents, legislations, regulations, and openly accessible information from local and international organizations. Process tracing is employed to systematically trace the evolution of policy, institutional, and regulatory frameworks. The primary finding of the study is that while the Ethiopian state has demonstrated considerable learning in the development of its industrial parks and managed to integrate the strategy well into its industrial policy, it lacks leverage over transnational capital to enforce technology transfer and create linkages within the local economy. This is compounded by a weak domestic private sector and disillusioned labour, which complicates efforts to improve productivity and foster local ownership. These two challenges might derail the effort to leverage industrial parks for broad-based transformation.