Special Economic Zones and WTO Compliance: Evidence from the Dominican Republic

Defever, F., Reyes, J-D., Riaño, A. & Sanchez-Martin, M. E. (2017). Special Economic Zones and WTO Compliance: Evidence from the Dominican Republic (Report No. 17/04). London, UK: Department of Economics, City, University of London.

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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 -apractice 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 firm-level. 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)
Additional Information: Copyright 2017, the authors.
Uncontrolled Keywords: Special Economic Zones; Export Share Requirements; Export Subsidies; Agreement on Subsidies and Countervailing Measures; Dominican Republic
Divisions: School of Social Sciences > Department of Economics > Department of Economics Discussion Paper Series
URI: http://openaccess.city.ac.uk/id/eprint/18701

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