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Mariya Brussevich
This study examines the socio-economic impact of special economic zones (SEZs) in Cambodia---a prominent place-based policy established in 2005. The paper employs a database on existing and future SEZs in Cambodia with matched household surveys at the district level and documents stylized facts on SEZs in a low-income country setting. To identify causal effects of the SEZ program, the paper (i) constructs an alternative control group including future SEZ program participants and districts adjacent to SEZ hosts; and (ii) employs a propensity score weighting technique. The study finds that entry of SEZs disproportionately benefits female workers and leads to a decline of income inequality at a district level. However, the findings also suggest that land values in SEZ districts tend to rise while wage levels remain largely unchanged relative to other districts. In addition, the paper tests for socio-economic spillovers to surrounding areas and for agglomeration effects associated with clusters of multiple SEZs.
Mariya Brussevich

1. Introduction Place-based policies are gaining popularity in both advanced and developing countries. While many advanced countries use place-based policies like Special Economic Zones (SEZs) to target economically disadvantaged locations, low-income countries rely on SEZs to promote export diversification and attract foreign investment. What is the socio-economic impact of such policies on local labor markets? The answer to this question is not theoretically obvious and empirical evidence remains inconclusive. Theoretically, SEZs are shown to result in

International Monetary Fund. Research Dept.

lagging regions particularly hurt. National policies that reduce distortions and encourage more flexible and open markets, while providing a robust social safety net, can facilitate regional adjustment to adverse shocks, dampening rises in unemployment. Place-based policies targeted at lagging regions may also play a role, but they must be carefully calibrated to ensure they help rather than hinder beneficial adjustment . Introduction Disparities in economic activity across subnational regions in the average advanced economy have been gradually creeping upward

William Gbohoui, Mr. Waikei R Lam, and Victor Duarte Lledo

. APPENDIX A. Evolution of Regional Disparity on Unemployment Rates B. Empirical Estimation on Key Determinants of Regional Inequality C. Interstate Migration and Regional Inequality D. Spatially-Targeted (Place-based) Policies: Evidence and Lessons E. Illustrative Exercise VII. REFERENCES

Mr. Ravi Balakrishnan, Mr. Christian H Ebeke, Melih Firat, Mr. Davide Malacrino, and Louise Rabier

-frequency Data: Mobility Index Customer Interaction Intensity Short-term Risks: Teleworkability Longer-term Risks: Automation Disparities and the Green Transition Policy Discussions Is There a Role for Place-based Policies? Smoothing the Effects of the Green Transition Across Different Regions Conclusions References Appendix A. Figures and Tables Appendix B. Disparities in Net Disposable Income Appendix C. The Green/Growth Tradeoff: A Case Study of Two German Regions 1 The authors would like to thank Andy Jobst, Myrto Oikonomou, and

Mr. Holger Floerkemeier and Mr. Nikola Spatafora
We discuss regional disparities in economic performance and living standards. We first set out some key facts, and provide a conceptual framework to help analyze whether such disparities are efficient, or instead reflect market and/or policy failures. We examine whether policy attempts to reduce regional disparities necessarily involve a trade-off between equity and efficiency. We then investigate whether policymakers should focus on boosting the economic performance of lagging regions—or, conversely, accept the presence of regional disparities, and instead assist households in lagging regions through transfer payments, investments in education, health, and other basic services, and by facilitating out-migration.
Mr. Ravi Balakrishnan, Mr. Christian H Ebeke, Melih Firat, Mr. Davide Malacrino, and Louise Rabier
While the level of disparities across regions in 10 advanced European economies studied in this paper mostly reflects productivity gaps, the increase since the Great Recession has resulted from diverging unemployment rates. Following the pandemic, this could be further exacerbated given teleworkability rates are lower in poorer regions than in high-income regions, making them ex-ante more vulnerable to the pandemic’s likely material impact on the prevalence of remote work. Preliminary evidence from 2020 confirms that regional disparities between countries increased during 2020. A further concern is that the pandemic might accelerate the automation of jobs across Europe, something which often happens following recessions. While lagging regions have lower ex-ante vulnerabilities against the routinization, the transformation of jobs through sectors with higher routinization rates in these regions could increase their vulnerability to technological change over time. The green transition could also lead to challenges for regions that have benefitted from carbon-intensive growth strategies. Finally, the paper discusses the role for policies—including placed-based ones—in reducing disparities in the face of the aforementioned short, medium, and long-term risks.