Title: Do Industrial Parks Improve Industrial Performance? Evidence from Ethiopia
Authors: Workenh Eshatuu Sime, Almaz Eshetu , Mestawot Shemilis
Volume: 10
Issue: 7
Pages: 146-158
Publication Date: 2026/07/28
Abstract:
Industrial parks serve as critical Special Economic Zones (SEZs) in Ethiopia, designed to promote export-oriented industrialization, attract Foreign Direct Investment (FDI), and stimulate sustainable economic growth. This study evaluates the impact of these parks on industrial performance using key macroeconomic indicators, addressing a knowledge gap regarding the actual performance of Ethiopia's rapidly expanding industrial park sector. Employing a mixed-methods research design, the authors utilized a panel dataset covering 68 zones and two federal-level city administrations. The analysis applies a Difference-in-Differences (DID) approach, comparing pre-treatment (2012-2013) and post-treatment (2016-2018) periods for second-generation industrial parks. The empirical results demonstrate that industrial parks have a positive and statistically significant impact on firms' performance across multiple dimensions. Specifically, enterprises located within industrial park zones achieved significantly higher levels of working capital, investment in fixed assets, total sales value, annual production value, and total export value compared to those in control zones. These findings align with Agglomeration Theory and Export-Led Growth Theory, suggesting that the clustering of industries and shared infrastructure effectively reduce transaction costs and enhance competitiveness. The study concludes that industrial parks are effective policy instruments for promoting industrial growth in Ethiopia and recommends continued expansion alongside improvements in infrastructure and administrative efficiency.