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Trade Performance of Free Trade Zones

Listed author(s):
  • Jean-Marc Siroën

    (LEDa - Laboratoire d'Economie de Dauphine - Université Paris-Dauphine)

  • Aycil Yücer

    (LEDa - Laboratoire d'Economie de Dauphine - Université Paris-Dauphine)

Free trade zones (FTZ) have become widespread with the liberalisation of international trade andinvestment. They are a key player in the deepening of the global value chain (GVC). However, little isknown about their contribution to world trade due to a lack of information on their location and status.This paper sets out to improve knowledge in this area by analysing the trade performance of FTZcountries at macro-level with a focus on FTZ externalities and distortive costs. We have built anoriginal database of FTZs where we define them as processing zones benefiting from import tariffincentives. We show that FTZs raise trade only by easing the negative impact of protection. Asimporters of components and raw materials, they raise the rest of the world’s exports. This confirmsthe contribution of FTZs to the GVC. This result is robust to a change in the model specification,errors and bias due to data collection issues and sample composition.

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Paper provided by HAL in its series Working Papers with number hal-01487320.

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Date of creation: 11 Mar 2017
Handle: RePEc:hal:wpaper:hal-01487320
Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-01487320
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  1. Creskoff, Stephen & Walkenhorst, Peter, 2009. "Implications of WTO disciplines for special economic zones in developing countries," Policy Research Working Paper Series 4892, The World Bank.
  2. Michael Engman & Osamu Onodera & Enrico Pinali, 2007. "Export Processing Zones: Past and Future Role in Trade and Development," OECD Trade Policy Papers 53, OECD Publishing.
  3. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
  4. Cindy Duc & Emmanuelle Lavallee & Jean-Marc Siroen, 2008. "The Gravity of Institutions," Economie Internationale, CEPII research center, issue 113, pages 95-113.
  5. Santos Silva, J.M.C. & Tenreyro, Silvana, 2011. "Further simulation evidence on the performance of the Poisson pseudo-maximum likelihood estimator," Economics Letters, Elsevier, vol. 112(2), pages 220-222, August.
  6. repec:dau:papers:123456789/214 is not listed on IDEAS
  7. Thomas Farole & Gokhan Akinci, 2011. "Special Economic Zones : Progress, Emerging Challenges, and Future Directions," World Bank Publications, The World Bank, number 2341, April.
  8. Johansson, Helena & Nilsson, Lars, 1997. "Export processing zones as catalysts," World Development, Elsevier, vol. 25(12), pages 2115-2128, December.
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