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Export Processing Zones and the Composition of Greenfield FDI

Ronald Davies () and Rodolphe Desbordes

No 201807, Working Papers from School of Economics, University College Dublin

Abstract: Export processing zones (EPZs) are an increasingly common type of special economic zone. They are designed to facilitate international trade by lowering trade costs, such as import duties and/or export taxes. EPZs should thus be particularly attractive locations for multinational enterprises engaging in vertical, trade-intensive, foreign direct investment (FDI). Using data on worldwide greenfield FDI projects over the period 2003-2014, we find patterns consistent with this hypothesis. EPZs have a large positive effect on manufacturing FDI projects with a production focus, especially in trade- and labour-intensive sectors. Overall, our results suggest that EPZs are an effective tool to attract manufacturing FDI which exploit the opportunities offered by global value chains.

Keywords: Export Processing Zone; Special Economic Zone; Greenfield FDI; Global Value Chain (search for similar items in EconPapers)
JEL-codes: F23 F13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-int
Date: 2018-04
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http://hdl.handle.net/10197/9448 First version, 2018 (application/pdf)

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