Twelfth Global Studies Conference

Abstract

In recent decades, several countries in sub-Saharan Africa have attempted to enhance their economic competitiveness by establishing special economic zones (SEZs). However, these SEZs have thus far had limited success, with some countries being much more adept at using theirs to attract foreign investment than others. There is much existing research on the factors that influenced the growth of SEZs in East Asia and Latin America, but these theories have yet to be applied in a rigorous way to the countries of sub-Saharan Africa. In this paper, I argue that the cultivation of human capital through state investments in health care and education results in better SEZ performance. I conduct a case study of four sub-Sarahan African nations that have made SEZs part of their development strategy: Nigeria, Kenya, Tanzania, and Ghana. The case study uses World Bank data on FDI inflows to SEZs and government expenditures between 2006 and 2012, in addition to news articles and official reports from this period. The analysis shows that countries that spent more on health care and education during this period attracted more FDI per capita through their SEZs. I argue that this is because these countries were less reliant on mechanisms such as tax holidays in promoting their SEZs, which allowed them to invest more funds into the people who work and manage the firms within them. This in turn resulted in the countries becoming more attractive to long-term foreign investors.