Economic effects of the Manaus tax free zone

Abstract

Manaus tax free zone is a unique entity that exists since 1957 in order to attract companies, manpower and development, through ever-greater tax subsidies, to a state that is disadvantaged by its size, isolation and lack of infrastructure. The present paper applies panel estimation with fixed effects to examine the progress made in the Amazonas in relation to the rest of the country between 2002 and 2014 regarding various economic indicators. The data indicate that neither GDP, GVA, income, nor tax revenues increase in the Amazon. Only for population size, employment and the fraction of workers with low levels of education positive effects are found.