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Trade Performance of Export Processing Zones
Author(s) -
Yücer Ayçıl,
Siroën JeanMarc
Publication year - 2017
Publication title -
the world economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.594
H-Index - 68
eISSN - 1467-9701
pISSN - 0378-5920
DOI - 10.1111/twec.12395
Subject(s) - free trade zone , economics , incentive , tariff , international economics , externality , international trade , investment (military) , trade barrier , business , microeconomics , politics , political science , law , china
Abstract Export processing zones ( EPZs ) have become widespread with the liberalisation of international trade and investment. They are key players in the deepening of the global value chain ( GVC ). However, little is known 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 EPZ countries at macro‐level with a focus on EPZ externalities and distortive costs. We have built an original database of EPZ s in which we define them as processing zones benefiting from import tariff incentives. We show that EPZ s increase trade only by easing the negative impact of protection. As importers of components and raw materials, they raise the rest of the world's exports. This confirms the contribution of EPZ s 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.