Special Economic Zones and WTO Compliance

Evidence from the Dominican Republic

Bibliographic Data

ID9723787
AuthorsFabrice Defever (0000-0001-6462-0522, City, University of London, CEP (LSE) and CESifo), José‐Daniel Reyes (World Bank), Alejandro Riaño (0000-0002-8824-4055, University of Nottingham, GEP, CFCM and CESifo), Miguel Eduardo Sánchez‐Martín (World Bank)
Year2019
Volume86
Issue343
Pages532-568
Publication date2019-07-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueEconomica (JOURNAL)
Journal identifiersISSN: 0013-0427 • E-ISSN: 1468-0335
PublisherWiley (PUBLISHER • GB)
DOI10.1111/ecca.12276
OpenAlexW2773593081
LanguageEN
References cited29

Special economic zones (SEZ), one of the most important instruments of industrial policy used in developing countries, often impose export share requirements (ESR). That is, firms located in SEZ are required to export more than a certain share of their output to enjoy a wide array of incentives—a practice prohibited by the World Trade Organization (WTO) Agreement on Subsidies and Countervailing Measures. In this paper we exploit the staggered removal of ESR across products and over time in the SEZ of the Dominican Republic—a reform driven by external commitments to comply with WTO disciplines on subsidies—to evaluate how ESR affect export performance at the product and firm levels. Using customs data on international trade transactions from the period 2006 to 2014, we find that making the Dominican SEZ regime WTO‐compliant made SEZ more attractive locations for exporters to be based in. The reform, however, did not have a significant effect on the country's exports or on the share of export value originating from SEZ

Business · Economics · Exploit · Export performance · Incentive · International economics · International trade · Market economy · Market share · Product (mathematics) · Subsidy · Economic Zones and Regional Development · Finance · Fiscal Policy and Economic Growth · Global trade and economics