longer‐term lower taxes, location, and local market access. Whether this expressed preference translates into improved zone performance in terms of exports, employment and economic transformation, however, is untested – indeed, it runs against most of the outcomes based findings in the FDI literature. Finally, in a study covering India, Bangladesh, and Sri Lanka, Aggarwal (2005) finds that infrastructure, good governance, and the overall national investment climate contribute to the success of economic zones. In a separate, recently completed paper (see Farole, 2011), we conduct a cross‐country investigation of the determinants of economic zone performance and find that among the key factors are market size and access, national competitiveness, and the zone‐level investment climate. In this paper, we focus specifically on the latter issue.

# **5. Data and methodology**

Original surveys and case study research was carried out during the second half of 2009 in six African countries (Ghana, Kenya, Lesotho, Nigeria, Senegal, and Tanzania) as well as two countries each in Latin America (Dominican Republic and Honduras) and Asia (Bangladesh and Vietnam). In addition, some data on zone performance are compiled from other sources including national zone authorities, key informant interviews, and established databases such as UNCTAD’s FDI database, UN COMTRADE, and World Development Indicators. The surveys provide a profile of the nature of investment in the zones and the expectations of investors, and then explore critical issues that may determine the degree of success of zones programs. Details of the survey methodology are provided in the appendix.

On some variables, the results from the zones surveys are compared with the conditions offered by the national (non‐SEZ) economies using weighted averages from the World Bank’s Enterprise Surveys. Although Enterprise Surveys use stratified samples to depict an accurate portrait of the business environment in the host economies, they were conducted in different years in the ten countries of study<sup>7</sup> . Insofar as some conditions captured by the Enterprise Surveys are not expected to change drastically over short periods of time, comparisons with EPZ survey data should remain valid, especially when differences are relatively large. However, these comparisons should also be treated with caution.

Although it is possible to compare the business environment inside EPZs with exporting firms outside them, there are two problems with this approach. First, the Enterprise Surveys were not sampled to be representative of exporting companies, and any comparison would have to perform some sort of post‐ stratification with data not readily available. Second, in some countries, the sample size for exporters is small and particularly problematic for some questions in this study. For this reasons, the analysis presented here compares the business environment reported by companies inside the EPZs with Enterprise Survey results from both exporters and non‐exporters. For the issues compared in this analysis – utilities set‐up times, utilities outages, and customs clearance – we have no reason to believe there should be any systematic difference in response from exporters and non‐exporters.

> 7 Enterprise Surveys were conducted in 2009 in Lesotho, Nigeria and Vietnam; 2007 in Ghana, Kenya, Senegal, and Bangladesh; 2006 in Tanzania and Honduras; and 2005 in Dominican Republic.

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