Does the Manaus Free Trade Zone Have an Impact on Industry Efficiency?

A study by the Climate Policy Initiative and PUC-Rio finds that the Manaus Free Trade Zone (ZFM) has not resulted in efficiency gains for the region's industries. Despite significant tax expenditures—reaching R$ 27.8 billion for ZFM, Western Amazon, and Free Trade Areas in 2015—both energy and productive efficiency levels in the ZFM remained similar to the national average from 2003 to 2015. This lack of impact persists even in the most representative sectors, such as two-wheel vehicle production and audio and video, where tax benefits are most concentrated.

• Analysis of data from 2003 to 2015 indicates that the energy and productive efficiency levels of the Manaus Free Trade Zone (ZFM) are similar to those of Brazil as a whole and remained stable, suggesting that tax reliefs did not lead to efficiency gains.
• The most significant industrial sectors in the ZFM did not show a marked difference in energy or productive efficiency compared to the rest of Brazil, meaning the ZFM's operation did not increase efficiency for these key industries.
• In 2015, the two-wheel vehicle production and audio and video sectors were the largest recipients of extra tax benefits in the ZFM, receiving 27% and 16% of the total estimated tax benefits, respectively.
• Despite being the most benefited sector by ZFM tax exemptions and hosting large companies for decades, the two-wheel vehicle production sector showed no improvement in efficiency levels over the years.
• The audio and video sector in the ZFM shows no comparative advantage in productive or energy efficiency over the rest of Brazil, despite 24% of the sector's firms being concentrated in the ZFM.
• Tax expenditures for the ZFM, Western Amazon, and Free Trade Areas more than doubled between 2010 and 2015, reaching R$ 27.8 billion in 2015, with over R$ 6 billion specifically for the ZFM industrial sector in that year.

APA

Assunção, J., Holz, R., & Schutze, A. (2020). Does the Manaus Free Trade Zone Have an Impact on Industry Efficiency? Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2020/03/ZFM-EN-2.pdf

Chicago

Assunção, Juliano, Rhayana Holz, and Amanda Schutze. Does the Manaus Free Trade Zone Have an Impact on Industry Efficiency? Climate Policy Initiative, 2020. https://www.climatepolicyinitiative.org/wp-content/uploads/2020/03/ZFM-EN-2.pdf.

Wikipedia

{{cite report |last1=Assunção |first1=Juliano |last2=Holz |first2=Rhayana |last3=Schutze |first3=Amanda |title=Does the Manaus Free Trade Zone Have an Impact on Industry Efficiency? |publisher=Climate Policy Initiative |date=March 2020 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2020/03/ZFM-EN-2.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{assuno2020does, author = {Assunção, Juliano and Holz, Rhayana and Schutze, Amanda}, title = {{Does the Manaus Free Trade Zone Have an Impact on Industry Efficiency?}}, institution = {Climate Policy Initiative}, year = {2020}, month = mar, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2020/03/ZFM-EN-2.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }