The spillover effects of United States foreign trade zones

Abstract

This article empirically tests the geographic and economic spillover effects of foreign trade zones (FTZs) in the United States by utilizing propensity score matching and the geographic rules of the programme. While these FTZ sites are designed to support manufacturing, we find that ZIP codes that receive FTZ sites experience growth in new and existing non-manufacturing establishments. Our results also show that FTZs spillover into nearby ZIP codes. We find that ZIP codes that border FTZ ZIP codes also experience positive effects on non-manufacturing establishments and these spillovers are strongest within a 5-mile radius of an FTZ.

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