Spatial & Temporal Impact of Foreign-Trade Zones on Economic Development in the United States

Authors: Jesse Lane*, University of North Carolina at Greensboro
Topics: Economic Geography, Urban Geography
Keywords: Economic development, international trade, spatial inequality, foreign-trade zones
Session Type: Paper
Presentation File: No File Uploaded

In 1934, the Foreign-Trade Zone Act was passed in order to ease restrictions on internationally traded goods, provide domestic firms with a competitive advantage over foreign companies, boost jobs in import/export businesses, increase exports, and promote economic development. The growth in the number of foreign-trade zones (FTZs) across the United States since 1934 has coincided with legislation allowing the addition of manufacturing firms and the creation of the subzone. Even with the growth of FTZs, these zones have remained largely obscure to academia and the public at large. Few scholars have evaluated the effectiveness of FTZs at meeting intended goals and even less have analyzed the spatial impact on local populations. This research analyzed the spatial distribution of FTZs and its relationship with local development patterns as well as the temporal change of short- and long-term impacts from the addition of FTZs at the county level in the United States. Results from the spatial regression analysis suggest that FTZs have a significant impact on the spatial distribution of median household income, unemployment rates, and the number of manufacturing firms. However, geographically weighted regression results reveal spatial non-stationarity within these results. Results from the temporal analysis suggest that FTZs may have short- and long-term impacts on unemployment rates and number of manufacturing firms, long-term impacts on manufacturing employment, and no impact on median household income.

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