Does the Elimination of Export Requirements in Special Economic Zones Affect Export Performance? : Evidence from the Dominican Republic
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 the...
| Main Authors: | , , , |
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| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2016
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2016/10/26898193/elimination-export-requirements-special-economic-zones-affect-export-performance-evidence-dominican-republic http://hdl.handle.net/10986/25319 |
| Summary: | 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. |
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