Special economic zones and firm resilience in Ghana: Evidence from the COVID-19 shock

Motivation: The study assesses whether Ghana's Special Economic Zone (SEZ) policy improved firm resilience during COVID-19 and provides evidence to guide more adaptive industrial policies that can withstand future global shocks in emerging economies. Purpose: This study examines the resilience SEZ firms in Ghana during the COVID-19 pandemic, focusing on operational continuity, sales performance, and productivity. Approach and Methods: Using firm-level panel data from 2018 to 2021, we employ a fixed effect estimation approach to compare SEZ and non-SEZ firms, assessing whether SEZs provided a buffer against economic shocks or exacerbated vulnerabilities. Findings: SEZ firms were more likely to suspend operations and remain closed for longer periods than non-SEZ firms, suggesting increased exposure to supply chain disruptions and declining export demand. Sales resilience was also weaker among SEZ firms, with a slower recovery trajectory than non-SEZ firms, indicating greater flexibility in market adaptation. Productivity analysis reveals no significant resilience advantage for SEZ firms, with pre-pandemic performance playing a stronger role in determining post-COVID outcomes. Policy Implications: The results challenge the assumption that SEZs inherently provide resilience to crises, highlighting the risks associated with rigid export dependencies and weak domestic supply chain integration. The study underscores the need for more adaptive SEZ policies that improve local market flexibility and strengthen industrial linkages to mitigate future economic shocks. These insights contribute to policy discussions on SEZ effectiveness in emerging economies during global disruptions.