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Winter 2018

ISSN 0890-913X

Volume 33, Number 4

Categories: Winter 2018 | Free economic zones

Liberalizing Rent-Seeking: How Export Processing Zones Can Save or Sink an Economy

Lotta Moberg, William Blair

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TheJournalofPrivateEnterprise33(4),2018,61–89LiberalizingRent-Seeking:HowExportProcessingZonesCanSaveorSinkanEconomyLottaMoberg*WilliamBlair______________________________________________________AbstractThispaperpresentsexportprocessingzones(EPZs)asarent-seekingtoolwiththeappearanceofadevelopmentpolicy.Mymodelofendogenoustariffformationillustrateshowinterestgroupslobbyfororagainstprotectionism,whichprovidesrentsforthegovernment.EPZsareawaytoliberalizetheeconomywhilepreservingsomeoftheserents.Theyarethereforebeneficialiftheirpoliticalalternativeismoreprotectionism.ThemodelindicatesthatEPZsdonotbenefitaneconomyviabackwardlinkagesbutthroughmarginalimprovementstoacountry’straderegime.AcasestudyoftheEPZsintheDominicanRepublicconfirmsthetheoreticaldiscussions.______________________________________________________JELCodes:D72,F13,P26,O24,O25Keywords:specialeconomiczones,rent-seeking,politicaleconomy,exportpromotion,exportprocessingzonesI.IntroductionMosteconomistsseerent-seekingaswasteful(Buchanan1980,p.359;Tullock2005,p.9).Lobbyingbybusinessestoinfluencegovernmentpolicyisanunproductiveactivity,butpolicymakersencourageitbecausetheybenefitfromtherent-seeking(HillmanandSchnytzer1986;Haber2002;Rose-Ackerman2006;Nye2009;Buchanan,Tollison,andTullock1980;AcemogluandRobinson2000,2012,p.84,chap.8).Acontrastingviewofrent-seekingisthatitcanactuallyoffereconomicbenefits.Itcan,forinstance,encouragetheprovisionofpublicgoods(Cowen,Glazer,andMcMillan1994)orincreasethewealthofacountrywhenitsgovernmentengagesintradeprotectionism(Bhagwati1980;BhagwatiandSrinivasan1980).Thispaperextendstheinsightthatrent-seekingcanbebeneficialby*IthankTylerCowen,RichardE.Wagner,GarettJones,MarkKoyama,A.ChristopherLimnios,andTomW.Bellforinvaluablecontributionstothisarticle.

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Metadata [hide]

Title	Liberalizing Rent-Seeking: How Export Processing Zones Can Save or Sink an Economy
Authors/Creators:	Lotta Moberg, William Blair
Year:	2018
Volume:	33
Number:	4
Pages:	61 - 89
Publisher:	The Association of Private Enterprise Education
ISSN:	0890-913X
Document Type:	Articles
Keywords:	special economic zones, rent-seeking, political economy, export promotion, export processing zones

Citation:
Moberg, Lotta / 2018. "Liberalizing Rent-Seeking: How Export Processing Zones Can Save or Sink an Economy." The Journal of Private Enterprise, 33(4): 61-89.