IDEAS home Printed from https://ideas.repec.org/p/wbk/wbrwps/7874.html
   My bibliography  Save this paper

Does the elimination of export requirements in special economic zones affect export performance? evidence from the Dominican Republic

Author

Listed:
  • Defever,Fabrice Fernand
  • Reyes,Jose Daniel
  • Riano,Alejandro
  • Sanchez Martin,Miguel Eduardo

Abstract

Special economic zones, one of the most important instruments of industrial policy in developing countries, often feature export share requirements. That is, firms located in these zones are obliged to export more than a certain stated share of their output to enjoy the wide array of incentives available there, a practice prohibited by the World Trade Organization. This paper exploits the staggered removal of export requirements across products and over time in the special economic zones of the Dominican Republic to evaluate whether the importance of exports originating from the zones was affected by the elimination of export requirements. The findings show that entry increased among firms in special economic zones, while the average value of export transactions fell for existing exporters following the reforms. At the same time, continuous exporters were unaffected by the policy change, possibly because these firms were not constrained by the export requirement. Overall, special economic zones became more important with respect to the number of exporters based there but not in terms of the value of exports. The findings suggest that the elimination of performance requirements made it more attractive for firms to be based in special economic zones.

Suggested Citation

  • Defever,Fabrice Fernand & Reyes,Jose Daniel & Riano,Alejandro & Sanchez Martin,Miguel Eduardo, 2016. "Does the elimination of export requirements in special economic zones affect export performance? evidence from the Dominican Republic," Policy Research Working Paper Series 7874, The World Bank.
    • Handle: RePEc:wbk:wbrwps:7874
    as

    Download full text from publisher

    File URL: http://documents.worldbank.org/curated/en/966411477664801267/pdf/WPS7874.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Simon J. Evenett & Martin Wermelinger, 2010. "A snapshot of contemporary protectionism: how important are the murkier forms of trade discrimination?," STUDIES IN TRADE AND INVESTMENT, in: Mia Mikic (ed.), Rising Non-Tariff Protectionism and Crisis Recovery, chapter 1, pages 8-26, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
    2. Krugman, Paul, 1980. "Scale Economies, Product Differentiation, and the Pattern of Trade," American Economic Review, American Economic Association, vol. 70(5), pages 950-959, December.
    3. repec:ilo:ilowps:398959 is not listed on IDEAS
    4. Elena Ianchovichina, 2007. "Are duty drawbacks on exports worth the hassle?," Canadian Journal of Economics, Canadian Economics Association, vol. 40(3), pages 881-913, August.
    5. Ronald B. Davies & Arman Mazhikeyev, 2019. "The Impact of Special Economic Zones on Exporting Behavior," Review of Economic Analysis, Digital Initiatives at the University of Waterloo Library, vol. 11(1), pages 145-174, July.
    6. Kyle Bagwell & Robert W. Staiger, 2006. "Will International Rules on Subsidies Disrupt the World Trading System?," American Economic Review, American Economic Association, vol. 96(3), pages 877-895, June.
    7. Wang, Jin, 2013. "The economic impact of Special Economic Zones: Evidence from Chinese municipalities," Journal of Development Economics, Elsevier, vol. 101(C), pages 133-147.
    8. Singa Boyenge, Jean-Pierre., 2007. "ILO database on export processing zones (Revised)," ILO Working Papers 993989593402676, International Labour Organization.
    9. Volpe Martincus, Christian, 2010. "Odyssey in International Markets: An Assessment of the Effectiveness of Export Promotion in Latin America and the Caribbean," IDB Publications (Books), Inter-American Development Bank, number 259, November.
    10. Simon Alder & Lin Shao & Fabrizio Zilibotti, 2012. "The Effect of Economic Reform and Industrial Policy in a Panel of Chinese Cities," DEGIT Conference Papers c017_061, DEGIT, Dynamics, Economic Growth, and International Trade.
    11. repec:idb:brikps:16458 is not listed on IDEAS
    12. Sanchez-Ancochea, Diego, 2006. "Development trajectories and new comparative advantages: Costa Rica and the Dominican Republic under Globalization," World Development, Elsevier, vol. 34(6), pages 996-1015, June.
    13. Fernandes, Ana M. & Freund, Caroline & Pierola, Martha Denisse, 2016. "Exporter behavior, country size and stage of development: Evidence from the exporter dynamics database," Journal of Development Economics, Elsevier, vol. 119(C), pages 121-137.
    14. Willmore, Larry, 1995. "Export processing zones in the Dominican Republic: A comment on Kaplinsky," World Development, Elsevier, vol. 23(3), pages 529-535, March.
    15. Carl Davidson & Steven J. Matusz & Mordechai E. Kreinin, 1985. "Analysis of Performance Standards for Direct Foreign Investments," Canadian Journal of Economics, Canadian Economics Association, vol. 18(4), pages 876-890, November.
    16. Christian Volpe Martincus, 2010. "Odyssey in International Markets: An Assessment of the Effectiveness of Export Promotion in Latin America and the Caribbean," IDB Publications (Books), Inter-American Development Bank, number 16458, February.
    17. Simon Alder & Lin Shao & Fabrizio Zilibotti, 2016. "Economic reforms and industrial policy in a panel of Chinese cities," Journal of Economic Growth, Springer, vol. 21(4), pages 305-349, December.
    18. Zheng Wang & Zhihong Yu, 2011. "Trading Partners, Traded Products, and Firm Performances: Evidence from China’s Exporter-Importers," Discussion Papers 11/13, University of Nottingham, GEP.
    19. Hamada, Koichi, 1974. "An economic analysis of the duty-free zone," Journal of International Economics, Elsevier, vol. 4(3), pages 225-241, August.
    20. Fernandes, Ana P. & Tang, Heiwai, 2012. "Determinants of vertical integration in export processing: Theory and evidence from China," Journal of Development Economics, Elsevier, vol. 99(2), pages 396-414.
    21. Devereux, John & Chen, Lein Lein, 1995. "Export Zones and Welfare: Another Look," Oxford Economic Papers, Oxford University Press, vol. 47(4), pages 704-713, October.
    22. 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.
    23. 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.
    24. Benedikt Heid & Mario Larch & Alejandro Riaño, 2013. "The Rise of the Maquiladoras: A M ixed Blessing," Review of Development Economics, Wiley Blackwell, vol. 17(2), pages 252-267, May.
    25. Dani Rodrik, 1987. "The Economics of Export-Performance Requirements," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 102(3), pages 633-650.
    26. Kaplinsky, Raphael, 1993. "Export Processing Zones in the Dominican Republic: Transforming manufactures into commodities," World Development, Elsevier, vol. 21(11), pages 1851-1865, November.
    27. Schrank, Andrew, 2008. "Export Processing Zones in the Dominican Republic: Schools or Stopgaps?," World Development, Elsevier, vol. 36(8), pages 1381-1397, August.
    28. Chi-Chur Chao & Eden S. H. Yu, 2014. "On Investment Measures and Trade," World Scientific Book Chapters, in: TRADE-RELATED INVESTMENT MEASURES Theory and Applications, chapter 1, pages 3-16, World Scientific Publishing Co. Pte. Ltd..
    29. Young, Leslie, 1991. "Unemployment and the optimal export-processing zone," Journal of Development Economics, Elsevier, vol. 37(1-2), pages 369-385, November.
    30. Chi-Chur Chao & Eden S H Yu, 2014. "Trade-Related Investment Measures:Theory and Applications," World Scientific Books, World Scientific Publishing Co. Pte. Ltd., number p946, February.
    31. Young, Leslie & Miyagiwa, Kaz F., 1987. "Unemployment and the formation of duty-free zones," Journal of Development Economics, Elsevier, vol. 26(2), pages 397-405, August.
    32. Elena Ianchovichina, 2007. "Are duty drawbacks on exports worth the hassle?," Canadian Journal of Economics, Canadian Economics Association, vol. 40(3), pages 881-913, August.
    33. Fabrice Defever & Alejandro Riaño, 2015. "Gone for Good? Subsidies with Export Share Requirements in China: 2002–13," The World Bank Economic Review, World Bank, vol. 29(suppl_1), pages 135-144.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Fabrice Defever & Alejandro Riaño, 2017. "Twin peaks," CEP Discussion Papers dp1505, Centre for Economic Performance, LSE.
    2. Fabrice Defever & José-Daniel Reyes & Alejandro Riaño & Gonzalo Varela, 2017. "All These Worlds Are Yours, Except India: The Effectiveness of Export Subsidies in Nepal," CESifo Working Paper Series 6418, CESifo.
    3. Fabrice Defever & Alejandro Riaño, 2017. "China’s Dual Export Sector," Discussion Papers 2017-01, University of Nottingham, GEP.
    4. World Bank Group, 2016. "Special Economic Zones in the Dominican Republic," World Bank Publications - Reports 26103, The World Bank Group.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Fabrice Defever & José‐Daniel Reyes & Alejandro Riaño & Miguel Eduardo Sánchez‐Martín, 2019. "Special Economic Zones and WTO Compliance: Evidence from the Dominican Republic," Economica, London School of Economics and Political Science, vol. 86(343), pages 532-568, July.
    2. Fabrice Defever & Alejandro Riaño, 2016. "Protectionism through Exporting: Subsidies with Export Share Requirements in China," Discussion Papers 2016-03, University of Nottingham, GEP.
    3. Defever, Fabrice & Riaño, Alejandro, 2017. "Subsidies with export share requirements in China," Journal of Development Economics, Elsevier, vol. 126(C), pages 33-51.
    4. Matthew Grant, 2020. "Why Special Economic Zones? Using Trade Policy to Discriminate across Importers," American Economic Review, American Economic Association, vol. 110(5), pages 1540-1571, May.
    5. Fabrice Defever & Alejandro Riaño, 2017. "China’s Dual Export Sector," Discussion Papers 2017-01, University of Nottingham, GEP.
    6. Brandt, Loren & Li, Bingjing & Morrow, Peter M., 2021. "Processing trade and costs of incomplete liberalization: The case of China," Journal of International Economics, Elsevier, vol. 131(C).
    7. Defever, Fabrice & Reyes, José-Daniel & Riaño, Alejandro & Varela, Gonzalo, 2020. "All these worlds are yours, except india: The effectiveness of cash subsidies to export in nepal," European Economic Review, Elsevier, vol. 128(C).
    8. Ayçıl Yücer & Jean-Marc Siroën, 2017. "Trade Performance of Export Processing Zones," The World Economy, Wiley Blackwell, vol. 40(5), pages 1012-1038, May.
    9. Johansson, Helena & Nilsson, Lars, 1997. "Export processing zones as catalysts," World Development, Elsevier, vol. 25(12), pages 2115-2128, December.
    10. Fabrice Defever & Alejandro Riaño, 2012. "China's Pure Exporter Subsidies," CEP Discussion Papers dp1182, Centre for Economic Performance, LSE.
    11. Quaicoe, Alexander & Aboagye, Anthony Q.Q. & Bokpin, Godfred A., 2017. "Assessing the impact of export processing zones on economic growth in Ghana," Research in International Business and Finance, Elsevier, vol. 42(C), pages 1150-1163.
    12. Reeg, Caroline, 2017. "Spatial development initiatives – potentials, challenges and policy lessons: with a specific outlook for inclusive agrocorridors in Sub-Sahara Africa," IDOS Studies, German Institute of Development and Sustainability (IDOS), volume 97, number 97, July.
    13. Lotta Moberg, 2018. "Liberalizing Rent-Seeking: How Export Processing Zones Can Save or Sink an Economy," Journal of Private Enterprise, The Association of Private Enterprise Education, vol. 33(Winter 20), pages 61-89.
    14. Yang Liu & Yidan Jin, 2022. "Special economic zones, export status, and firms’ productivity: Theory and evidence from China," Review of Development Economics, Wiley Blackwell, vol. 26(3), pages 1338-1360, August.
    15. repec:wsr:wpaper:y:2013:i:121 is not listed on IDEAS
    16. Zheng, Guo & Barbieri, Elisa & Di Tommaso, Marco R. & Zhang, Lei, 2016. "Development zones and local economic growth: zooming in on the Chinese case," China Economic Review, Elsevier, vol. 38(C), pages 238-249.
    17. Farole, Thomas & Moberg, Lotta, 2014. "It worked in China, so why not in Africa? The political economy challenge of Special Economic Zones," WIDER Working Paper Series 152, World Institute for Development Economic Research (UNU-WIDER).
    18. Esposito, Federico, 2022. "Demand risk and diversification through international trade," Journal of International Economics, Elsevier, vol. 135(C).
    19. David H. Autor & David Dorn & Gordon H. Hanson, 2016. "The China Shock: Learning from Labor-Market Adjustment to Large Changes in Trade," Annual Review of Economics, Annual Reviews, vol. 8(1), pages 205-240, October.
    20. Ana M. Fernandes & Peter J. Klenow & Sergii Meleshchuk & Denisse Pierola & Andrés Rodríguez-Clare, 2018. "The Intensive Margin in Trade," NBER Working Papers 25195, National Bureau of Economic Research, Inc.
    21. Sargent, John & Matthews, Linda, 2009. "China versus Mexico in the Global EPZ Industry: Maquiladoras, FDI Quality, and Plant Mortality," World Development, Elsevier, vol. 37(6), pages 1069-1082, June.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:7874. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Roula I. Yazigi (email available below). General contact details of provider: https://edirc.repec.org/data/dvewbus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.