Special economic zones and WTO compliance: evidence from the Dominican Republic

Defever, Fabrice, Reyes, Jose-Daniel, Riaño, Alejandro and Sánchez-Martín, Miguel Eduardo (2017) Special economic zones and WTO compliance: evidence from the Dominican Republic. CEP Discussion Papers (CEPDP1517). London School of Economics and Political Science. Centre for Economic Performance, London, UK.

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Abstract

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's 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 effect export performance at the product- and firmlevel. 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 nor on the share of export value originating from SEZ

Item Type:	Monograph (Discussion Paper)
Official URL:	http://cep.lse.ac.uk/
Additional Information:	© 2017 The Authors
Divisions:	Centre for Economic Performance
Subjects:	H Social Sciences > HC Economic History and Conditions H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management J Political Science > JL Political institutions (America except United States)
JEL classification:	F - International Economics > F1 - Trade > F12 - Models of Trade with Imperfect Competition and Scale Economies F - International Economics > F1 - Trade > F13 - Commercial Policy; Protection; Promotion; Trade Negotiations; International Trade Organizations O - Economic Development, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O47 - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output (Income) Convergence
Date Deposited:	01 Feb 2018 12:54
Last Modified:	15 Sep 2023 23:43
Funders:	Economic and Social Research Council
URI:	http://eprints.lse.ac.uk/id/eprint/86614

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