Latent Dimensions of the Economic Impact of Industrial Park Development Projects in Ethiopia: Evidence from Exploratory Factor Analysis and Ordered Probit Models

Industrial Park development has become a strategic policy instrument for accelerating industrialization, attracting investment, creating employment opportunities, and promoting sustainable economic development in Ethiopia. However, empirical evidence on the multidimensional factors shaping the economic impact of industrial park development projects remains limited. This study examines the latent economic, social, political, technological, cultural, and environmental dimensions influencing the economic impact of industrial park development projects in Ethiopia. A mixed-methods research design was employed using survey data collected from employees, managers, administrators, and community representatives across Ethiopian industrial parks. Exploratory Factor Analysis (EFA) with Principal Component Analysis and Varimax rotation was used to identify the underlying latent dimensions, while Ordered Probit and Ordered Logit models were employed to estimate their effects on the indexed economic impact of industrial park development projects. The findings reveal that high community commitment, abundant non-financial resources, tangible government support, and strong social capital significantly enhance the economic impact of industrial park development projects. In contrast, unskilled labour supply, outdated technology, geographic concentration of industrial parks, and weak institutional capacity significantly constrain their economic contribution. The study concludes that maximizing the economic impact of industrial parks requires integrated policy interventions that strengthen institutional support, enhance workforce skills, promote technological upgrading, and encourage more balanced regional distribution of industrial parks. The findings contribute to the literature by providing a multidimensional empirical framework for understanding the determinants of industrial park performance and offer evidence-based policy recommendations for promoting sustainable industrial development in Ethiopia.