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Import processing zones, tools for regional integration? The case of the free trade zone of Manaus (Brazil)

NJIKE, ARNOLD (2019): Import processing zones, tools for regional integration? The case of the free trade zone of Manaus (Brazil).

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Abstract

Characterised by low-quality transport infrastructures and located quite far from the country economic centre, the Amazonian region in Brazil was almost wholly disconnected from the rest of the country for several decades. In conjunction with other factors, this motivated the creation of a Free Trade Zone in the region by Brazilian authorities to foster economic linkages with the country’s other states. We examine in this article whether this challenging goal of connecting an isolated region marked by lowquality transport infrastructures to a distant economic centre has been accomplished and if the Free Trade Zone (FTZ) has played a role in the process. Using a gravity model to assess each Brazilian state trade performance and level of trade costs, we found that the two entities representing the state of Amazonas (Manaus where the Free Trade Zone is implanted and the rest of Amazonas) were among the most effective intra-national exporters in Brazil in 2008 despite facing the highest level of trade costs in the country. These apparently counter-intuitive findings indicate a potentially significant role of the FTZ in this process of integration.

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