Foreign-Trade Zones in the Southeastern United States: Do They Promote Economic Development or Lead to Spatial Inequality?

Foreign-trade zones (FTZs) are restricted-access sites where domestic and foreign goods are stored, manufactured, or assembled. Products foreign bound from an FTZ do not pay duties, tariffs, or ad valorem state taxes, yet are considered domestic goods. These zones are outside of US Customs and Borders Protection (CBP) jurisdiction and are considered foreign territory. FTZs are intended to promote economic development, provide a competitive advantage to US firms, and improve access to foreign markets for US manufacturing firms. However, while these zones can positively impact local economies, they may attract investment away from underserved regions, thereby exacerbating spatial inequality. This paper analyzes the spatial relationship between the number of FTZs, median household income, unemployment rates, income growth rates, and the number of manufacturing firms by county in the Southeastern United States. Results from this study find that counties with FTZs in the Southeast have significantly higher economic output than counties without access to FTZs. [ABSTRACT FROM AUTHOR]