Location Determinants of Foreign Firms in Poland: the Role of Special Economic Zones

This work analyzes the factors that may affect the location determinants of firms with foreign capital participation in Poland based on the county (powiat) level data from 2002 to 2007. The main focus factor is Special Economic Zones (SEZs), which have been established by the Polish government to attract investors and ultimately develop targeted regions? economy. The findings show that there is no significant role of SEZs in attracting foreign capital into a location as SEZs variable loses statistical significance when a number of other regional variables are included into the estimation. It is found that instead of investment incentives offered through SEZs, foreign investors care more about market related factors such as population, income level and proximity to particular country borders which might capture location?s market size, market demand and market potential respectively.