Export Processing Zones, Backward Linkages and Unemployment

Shigemi Yabuuchi ()
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Shigemi Yabuuchi: Nagoya City University, Postal: Department of Economics, Nagoya City university, Yamanohata, Mizuho, Nagoya 467-8501, Japan

Journal of Economic Integration, 2003, vol. 18, 360-371

Abstract:

This paper investigates the effects of export processing zones (EPZs) on factor rewards, national income and the output of the domestic intermediate good producing sector (backward linkage effect) in surpluslabor developing countries. It is shown that if the intermediate good is internationally traded, an increase in foreign capital investment in the EPZs will not change factor rewards and then national income irrespective of the existence of unemployment. It is also shown that, contrary to the conventional wisdom, an increase in foreign capital investment decreases production of the intermediate good and increases unemployment. The effects of factor accumulation on outputs and unemployment are also examined.

Keywords: Export processing zone; Backward linkage; Unemployment (search for similar items in EconPapers)
JEL-codes: F22 O12 (search for similar items in EconPapers)
Date: 2003
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Persistent link: https://EconPapers.repec.org/RePEc:ris:integr:0238

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