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

This report by the Climate Policy Initiative (CPI) and PUC-Rio analyzes whether the tax exemptions provided by the Manaus Free Trade Zone (ZFM) have improved the productive and energy efficiency of industries in the region compared to the rest of Brazil between 2003 and 2015. The study concludes that despite significant fiscal incentives, there is no evidence of efficiency gains at either the aggregate or sectoral levels.

• 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 throughout the period, suggesting that high volumes of tax reliefs did not result in efficiency gains.
• Tax expenditures for the ZFM, Western Amazon, and Free Trade Areas (FTA) across industrial, agricultural, service, and trade sectors more than doubled between 2010 and 2015, reaching R$ 27.8 billion in 2015. Specifically, tax expenditures for the ZFM's industrial sector exceeded R$ 6 billion in 2015.
• In 2015, the two-wheel vehicle production and audio and video sectors were the most significant recipients of extra tax benefits in the ZFM, receiving 27% and 16% of the total estimated tax benefits, respectively.
• The two-wheel vehicle production sector in the ZFM is highly concentrated, employing 56% of all personnel working in that sector across Brazil, yet it shows no indication of efficiency improvement over the years despite being the most benefited by tax exemptions.
• The audio and video sector in the ZFM does not possess comparative advantages in productive or energy efficiency compared to the rest of Brazil, despite 24% of the sector's firms being concentrated in the ZFM.
• The study concludes that the industrial policy of the ZFM has not contributed to an increase in Brazil's overall productivity or energy efficiency, demonstrating that lower production costs derived from tax benefits do not necessarily correlate with efficiency increases.

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} }