Shape in the Green

SPECIAL ECONOMIC ZONES

Since the first export processing zone was established in Puerto Rico during the 1940s, special economic zones (SEZs) have proliferated to number 5,400 across 147 countries and employ more than 100 million workers. While the zones have been lauded for generating economic growth and allowing for infant industry development, recent work has documented their concerning impact on labor markets and domestic regulatory frameworks.

In a recently published book chapter, PATRICK NEVELING analyzes the history of SEZs throughout the postwar period:

“The Roosevelt administration injected significant sums of money into Puerto Rican infrastructure after 1934, in response to massive strikes and riots across all economic sectors on the island. From the 1940s onward, Puerto Rico set up three crucial institutions: a planning board that oversaw the implementation of industrial standards, a development bank that supplied new industries with capital, and a parastatal development corporation that managed new import-substitution industries. However, the import-substitution phase in Puerto Rico was to be short-lived. Five years after those factories had opened in 1942, Puerto Rico lured mainland manufacturers with tax holidays and financial subsidies to relocate their production. As the Puerto Rican export-oriented industrialization programme coincided with the beginning of US international development aid for pro-capitalist allies across the Third World, the Truman administration’s Point Four programme made extensive use of the island’s success story. Thousands of officials from postcolonial nations were flown in and other European colonial powers in the Caribbean were pushed to embrace similar programmes.

The World Bank and IMF made EPZs an integral part of the many structural adjustment programmes that postcolonial nations had to sign up to during the 80s debt crisis. Subsequently many other nations across the world would sign SAPs and be forced to privatize national industries and establish tripartite institutions of the Puerto Rican kind, with national standard boards that now oversee compliance with the International Organization for Standardization’s ISO norms series, national development banks, and development organizations with private-sector majorities on executive boards. Why did Western nations promote SEZ in developing nations even though heart-lands of textile and garment production in the United States, the United Kingdom, Germany, and elsewhere went into rapid decline with deindustrialization? Emerging multinational corporations in the textile and garment sector and later also in consumer electronics, automobile production, and so forth could use their increased and low-risk capital mobility to play off manufacturing locations against one another by forcing trade unions to accept wage cuts in exchange for relocation waivers.”

Link to the piece.

• “While EPZs have flourished as a vehicle for globalized production, as an employer strategy for low-cost exports, and as a governmental strategy to absorb surplus labour and attract FDI, they have failed to create decent jobs.” A 2011 ILO report by Jamie K. McCallum offers a comparative review of labor market impacts of EPZs in China, Honduras, Nicaragua and South Africa. Link.
• Nathalie Picarelli on the distributional impacts of export processing zones in Nicaragua: “the policy benefited the upper-tail the most.” Link.
• Another piece by Neveling analyzes “Free Trade Zones, Export Processing Zones, Special Economic Zones and Global Imperial Formations 200 BCE to 2015 CE. Link.

NEW RESEARCHERS

Demographic Disparities and Flood Response

Post-doctoral fellow at NYU’s Institute for Policy Integrity ANA VARELA VARELA studies sustainable development, flooding, and flood resilience globally. In a 2019 paper, she analyzes how income disparities impact economic recovery in the aftermath of Superstorm Sandy.

From the article:

“Using evidence from property sales in four US states affected by Superstorm Sandy in 2012, combined with buyers’ demographics, I find that flooded properties in neighborhoods with high preexisting income had more high-income white buyers and higher sale prices than comparable non-flooded coastal properties, seemingly capitalizing on the flood and offsetting average drops. Using machine learning algorithms, I corroborate that of a rich set of preexisting place characteristics, neighborhood income best discriminates between most positively and most negatively affected properties. As coastal flooding is forecasted to increase, these results improve our understanding of the heterogenous impacts of floods, and on the existence of adaptive behavior, or lack thereof, after flooding. In some places, lower property prices and changes in neighborhood demographics after flood can speed the process of urban decay. The resulting community post-flood may have less capacity to economically respond or bound back after the inevitable next storm, or even evacuate in case of immediate danger. This dynamic could lead to the entrenchment of pockets of social vulnerability along an increasingly risky shoreline. In other places, flood properties increase in value post-flood. For these, insurance rate discounts based on property construction year and location could actually serve as regressive subsidies for high-income households.”

Link to the piece, link to Varela Varela’s website.

Each week we highlight great work from a graduate student, postdoc, or early-career professor. Have you read any excellent research recently that you’d like to see shared here? Send it our way: editorial@jainfamilyinstitute.org.

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• New JFI report & interactive map present one of the most comprehensive datasets on higher ed debt by income, race, and age since 2009: “We found that all young borrowers are saddled with dramatically rising debt since 2009, but low-income groups, BIPOC, and those in their 30s fare worse than others. While richer students have higher absolute debt, low-income students experience massive and growing relative debt burdens. And students in majority-Black and Hispanic zip codes have seen larger debt increases than those in majority-white zip codes.” Link to the report, link to the map.
• Abhay Aneja and Guo Xu “link personnel records of the federal civil service to census data for 1907-1921 to study the segregation of the civil service by race under President Woodrow Wilson.” Link.
• “We need to stop seeing growth as an end in itself, but rather as a means to achieving societal goals including environmental sustainability, reduced inequality, greater wellbeing and improved resilience.” A new OECD report urges policymakers to look “Beyond Growth.” Link.
• “Rather than a consequence of excessive concentration of power within the executive, authoritarian practices were adopted by a spectrum of conservative societal institutions.” Niels Søndergaard on authoritarian neoliberalism in Brazil. Link.
• “For e-car batteries and energy storage alone, Europe will need up to 18 times more lithium by 2030 and up to 60 times more by 2050.” Diego Francesco Marin on Europe’s scramble for raw materials. Link. For more on resource extraction, see Phenomenal World’s report from earlier this year. h/t Francis
• A new AI Now report asseses India’s Aadhaar biometric identity project. Link
• Two new reports on income inequality: one from the Census Bureau, and one from the RAND Corporation. Link and link. CEPR’s Shawn Fremstad notes: “The poverty line used by the Census Bureau is much lower than the amount of income most Americans say is needed in today’s America.” Link to his full statement.
• “Although left-wing actors operate primarily through offline protest, right-wing activists manipulate legacy media, migrate to alternative platforms, and work strategically with partisan media to spread their messages.” Deen Freelon, Alice Marwick, and Daniel Kreiss on online activism. Link.
• Manuel Bellanger et. al survey analytical frameworks for cross-sector conflicts over marine and coastal governance. Link.
• “We analyse ancient proteins from human dental calculus recovered from geographically diverse locations across Mongolia and spanning 5,000 years. We present the earliest evidence for dairy consumption on the eastern Eurasian steppe by circa 3000 BC and the later emergence of horse milking at circa 1200 BC, concurrent with the first evidence for horse riding. We argue that ruminant dairying contributed to the demographic success of Bronze Age Mongolian populations and that the origins of traditional horse dairy products in eastern Eurasia are closely tied to the regional emergence of mounted herding societies during the late second millennium BC.” By Shevan Wilkin et. al. Link.

Each week we highlight research from a graduate student, postdoc, or early-career professor. Send us recommendations: editorial@jainfamilyinstitute.org