A study on PEZA: investment momentum and employment reallocation in the Philippines
Date
2026-05-18
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Abstract
This study examines whether sustained investment in Philippine Special Economic Zones (SEZs) affects regional employment distribution. Using panel data from from 2002 to 2021, it analyzes the relationship between firm registrations and regional employment share. A lagged baseline model compares contemporaneous and linear investments specifications to test whether medium to high volume of sustained investment leads to larger effects than short-term spikes. Results show that sustained investment is generally associated with increases in regional employment share, indicating the presence of cumulative dynamics with effects stronger in regions with existing industrial capacity and better access to major markets. However, while the linear model suggests a positive average effect of additional firm entry, alternative specifications indicate that the relationship may vary across investment levels, with diminishing gains in some regions at higher levels of sustained investment. These findings suggest that SEZ effectiveness depends not only on attracting investment but on sustaining it over time and supporting it with complementary conditions.
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SEZs, employment share, investment momentum