An industrial policy that is common to several countries, the free zone is an area in which companies receive fiscal incentives that stimulate trade and accelerate the development of a region. This model, however, has been questioned in relation to its efficiency. Recently published by the Climate Policy Initiative (CPI), the report “The Manaus Free Zone: Measuring the Impact of Public Policy on Brazilian Industry” analyzes precisely this, from certain premises: a concise history of the ZFM and its history of over half century; evolution of the productive efficiency and energy efficiency for industry in Brazil and in the ZFM between 2003 and 2015; presentation of the most important industrial sectors of the ZFM; an analysis and comparison of the productive and energy efficiency of the ZFM and of Brazil for the selected sectors; an expansion of the free zone concept, explaining how the model transforms in different countries.
The conclusion is not encouraging for the Manaus Free Zone. Brazilian industry and the ZFM do not present differences in relation to productive and energy efficiency. The same is observed when analyzing only the most significant sectors of the ZFM: motorcycles, audio and video, communication, soft drinks and plastic. In other words, the effect of the fiscal exemptions and benefits granted to the Free Zone “is not shown to be sufficient to induce an improvement in the efficiency of the firms in any of the most important sectors.”
Read the report in full.