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

Defever, Fabrice; Riaño, Alejandro; Reyes, Jose-Daniel; Sanchez-Martin, Miguel Eduardo

Authors

Fabrice Defever fabrice.defever@city.ac.uk

Alejandro Riaño alejandro.riano@nottingham.ac.uk

Jose-Daniel Reyes danielreyes@worldbank.org

Miguel Eduardo Sanchez-Martin msanchezmartin@worldbank.org



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 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.

Journal Article Type Article
Publication Date 2019-07
Journal Economica
Print ISSN 0013-0427
Electronic ISSN 1468-0335
Publisher Wiley
Peer Reviewed Peer Reviewed
Volume 86
Issue 343
Pages 532-568
APA6 Citation Defever, F., Riaño, A., Reyes, J., & Sanchez-Martin, M. E. (2019). Special economic zones and WTO compliance: evidence from the Dominican Republic. Economica, 86(343), 532-568. doi:10.1111/ecca.12276
DOI https://doi.org/10.1111/ecca.12276
Keywords Special economic zones; Export share requirements; Export subsidies; Agreement on subsidies and countervailing measures; Dominican Republic
Publisher URL https://onlinelibrary.wiley.com/doi/abs/10.1111/ecca.12276
Copyright Statement Copyright information regarding this work can be found at the following address: http://eprints.nottingh.../end_user_agreement.pdf
Additional Information This is the peer reviewed version of the following article: Defever, F. , Reyes, J. , Riaño, A. and Sánchez-Martín, M. E. (2018), Special Economic Zones and WTO Compliance: Evidence from the Dominican Republic. Economica. . doi:10.1111/ecca.12276, which has been published in final form at https://onlinelibrary.w...i=10.1111%2Fecca.12276. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving.

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Copyright Statement
Copyright information regarding this work can be found at the following address: http://eprints.nottingham.ac.uk/end_user_agreement.pdf





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