Washington, DC – An economic study by a leading research firm concludes that U.S. Foreign-Trade Zones (FTZs) have a positive impact on employment growth, wage growth, and value-added growth in American communities in which they are located, compared to similar communities without FTZs.
The study, “The U.S. Foreign-Trade Zones Program: Economic Benefits to American Communities,” was conducted by the Trade Partnership, a Washington, DC-based trade research firm whose team of international economists has provided high-quality economic and trade policy analysis since 1991. The National Association of Foreign-Trade Zones (NAFTZ) commissioned the study in 2018 to inform policymakers and the public about the actual economic impacts of FTZs, and to provide an analytic tool for economic development institutions and policy makers. Previously published reports on the FTZ program by the Congressional Research Service and the Government Accountability Office pointed out that few economic studies of FTZs had been performed and that none had actually quantified the economic effects of the program.
The study was publicly released following a presentation of the findings by Trade Partnership president Laura M. Baughman at NAFTZ’s annual Legislative Summit in Washington on Feb. 12.
This study measures, both quantitatively and qualitatively, the economic effects of FTZs on the communities in which the zones operate, which the authors refer to as Zone Economic Communities (ZECs). The economic impacts of FTZs on ZECs were examined using an econometric approach that enabled the research team to attribute changes in community employment, wages, and “value added” to the operation of a zone. The latter term refers to the difference between gross output and intermediate inputs and represents the value of labor and capital used in producing gross output.
“The economic impacts of the U.S. FTZ program on communities in which FTZs are located are positive,” said Laura Baughman. “Many companies have the option to operate inside or outside the United States. They will make that decision based in part on the relative costs of doing business in the United States or abroad. To the extent the Foreign-Trade Zones program can 2 provide positive financial reasons for a U.S. location, it should merit the support of U.S. policymakers.”