The Heterogeneous Effect of the Italian Special Economic Zones on Firms: A Regional Analysis

ABSTRACT This paper evaluates the firm‐level effects of geographical eligibility for the Italian Special Economic Zones (SEZs) policy in the Mezzogiorno over the period 2015–2023. Since administrative records on actual incentive uptake are not available, the empirical analysis should be interpreted as an intention‐to‐treat estimate, capturing the effect of being located in a designated SEZ area rather than the effect of receiving SEZ benefits. Using balance‐sheet data, Coarsened Exact Matching (CEM), and staggered Difference‐in‐Differences estimators, results suggest that SEZ eligibility is associated with a significant increase in investment and, to a lesser extent, profitability, while effects on employment are limited and delayed. Strong regional heterogeneity emerges, with areas such as Campania, Calabria, and Sardinia showing null or negative outcomes. Robustness checks based on alternative staggered‐adoption estimators, matching procedures, and controls for institutional quality confirm the main findings. Overall, the results suggest that place‐based incentives can stimulate firm investment, although their effectiveness varies substantially across territories, providing relevant insights for the design of future regional development strategies.