Do enterprise zones promote local business development? Evidence from Vietnam

We examined the effects of Vietnamese enterprise zones, under the initiative of the central government, on local businesses across different types of ownership of zone infrastructure developers (ZIDs). We constructed a panel of communes during 2000-2007 using data on zone-based firms, local firms, and zones. We found that zones led to an increased number of firms and increased employment in the communes hosting the zones, even after excluding zone-based firms. Our findings also suggest that private partnerships in ZIDs worked best in attracting firms to the zones. The spatial spillover effects of the zones occurred up to a distance of 14 km.