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Export Processing Zones and the Composition of Greenfield FDI

Author

Listed:
  • Ronald B. Davies
  • Rodolphe Desbordes

Abstract

Export processing zones (EPZs) are an increasingly common type of special economic zone. They are designed to facilitate international trade by lowering trade costs, such as import duties and/or export taxes. EPZs should thus be particularly attractive locations for multinational enterprises engaging in vertical, trade-intensive, foreign direct investment (FDI). Using data on worldwide greenfield FDI projects over the period 2003-2014, we find patterns consistent with this hypothesis. EPZs have a large positive effect on manufacturing FDI projects with a production focus, especially in trade- and labour-intensive sectors. Overall, our results suggest that EPZs are an effective tool to attract manufacturing FDI which exploit the opportunities offered by global value chains.

Suggested Citation

  • Ronald B. Davies & Rodolphe Desbordes, 2018. "Export Processing Zones and the Composition of Greenfield FDI," Working Papers 201807, School of Economics, University College Dublin.
    • Handle: RePEc:ucn:wpaper:201807
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    File URL: http://hdl.handle.net/10197/9448
    File Function: First version, 2018
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    References listed on IDEAS

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    2. Christian Volpe-Martincus & Kerry Loaiza-Marín & Sandro Zolezzi-Hernández & Keyssi Calderón-Medina, 2024. "How does investment and trade facilitation affect foreign affiliates performance: Firm-level evidence," Documentos de Trabajo 2401, Banco Central de Costa Rica.

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    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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