Industrial Parks and Their Impact on Development

This paper reviews theoretical, empirical, and practical studies of industrial parks and examines their impact on development, particularly for developing countries. Theoretical mechanisms indicate positive impacts of industrial parks on economic development through agglomeration economies, including internal/external economies, reduced transaction costs, capital accumulation, and learning and knowledge spillovers. Meanwhile, empirical studies examining special economic zones (SEZs), i.e. industrial hubs with strong incentives for resident firms, show that they do not necessarily bring out high performance. This means that the design of industrial parks and supporting policies are critical for them to cause positive impacts on development for developing countries. This paper points to new issues of industrial park development that policymakers should note. Consideration of the Sustainable Development Goals (e.g. environment, female labour force, and human rights) is necessary to attract foreign direct investment (FDI) that has greater interest in these sustainability issues. This paper also indicates that digitalisation, the service economy, and natural resources should be incorporated into industrial park development strategies to create diversified and upgraded industries. Finally, this paper attempts to provide policy lessons to viable industrial parks based on the above-mentioned discussions, which can serve as a reference point for developing countries.