Teixei a, Louisiana Ca alcan i
A icle
Labo s anda ds and social condi ions in ee ade zones:
The case o he Manaus ee ade zone
Economics: The Open-Access, Open-Assessmen E-Jou nal
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in ee ade zones: The case o he Manaus ee ade zone, Economics: The Open-Access, Open-
Assessmen E-Jou nal, ISSN 1864-6042, Kiel Ins i u e o he Wo ld Economy (I W), Kiel, Vol. 14, Iss.
2020-19, pp. 1-41,
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Labo s anda ds and social condi ions in ee ade
zones: he case o he Manaus ee ade zone
Louisiana Ca alcan i Teixei a
Abs ac
The c ea ion o he Manaus F ee T ade Zone had a de elopmen pu pose in he B azilian
poli ical, economic and social scena io be ween 1960 and 1970. This indus ial pole was
an impo an de ice in achie ing he desi ed de elopmen , popula ing a egion conside ed
dese ed and exposed o ex e nal h ea s a ha ime. I has gua an eed he imp o emen
on labo s anda ds and social condi ions in he Manaus’ dis ic and has become he
main d i ing o ce behind egional employmen , highe sala ies and g ow h o e he pas
decades. Using he esiduals and he s ochas ic on ie echniques o es ima e he labo
and social pe o mances o he Manaus F ee T ade Zone, he analysis con i ms ha he
implemen a ion o he special economic zone collabo a ed o labo and social e iciency
in he a ea – compa ed o o he impo an indus ial B azilian municipali ies – due o he
igid checks conduc ed by SUFRAMA and he s ic espec o labo s anda ds applied
in he MFTZ. Ne e heless, economic linkages in he egion a e s ill weak and posi i e
spillo e s om Manaus o i s su oundings we e p obably inexis en .
(Published in Special Issue Recen de elopmen s in in e na ional economics)
JEL F12 F13 F14
Keywo ds F ee ade zone; Manaus; employmen ; labo s anda ds; social p og ess
Au ho s
Louisiana Ca alcan i Teixei a, Uni e si y Pa is Dauphine, DIAL-IRD,
[email p o ec ed]
Ci a ion Louisiana Ca alcan i Teixei a (2020). Labo s anda ds and social condi ions
in ee ade zones: he case o he Manaus ee ade zone . Economics: The Open-
Access, Open-Assessmen E-Jou nal, 14 (2020-19): 1–41. h p://dx.doi.o g/10.5018/
economics-ejou nal.ja.2020-19
Economics: The Open-Access, Open-Assessmen E-Jou nal 14 (2020-19)
1 In oduc ion
Special Economic Zones (SEZs) consis in a pa icula o m o ade libe aliza ion.
1
These zones
can be de ined as "dema ca ed geog aphic a eas con ained wi hin a coun y’s na ional bounda ies
whe e he ules o business a e di e en om hose ha p e ail in he na ional e i o y" (Fa ole
and Akinci, 2011). Gene ally, hey a e implemen ed by go e nmen s in o de o p omo e ade and
p o ide a ee ade en i onmen wi hin a limi ed e i o y in which he e is a special egula ion
o he companies’ ope a ion. I s pu pose is he e o e o s imula e ade and, in some cases, o
accele a e egional de elopmen .
SEZs a e pa o he ade en i onmen cha ac e ized by he in e na ional agmen a ion o
p oduc ion. Fi ms eo ganized hei p oduc ion based on ou sou cing some o hei ac i i ies,
elying on a la ge numbe o ex e nal supplie s o in e media e componen s and se ices. The
commonly sugges ed explana ion o he g owing eliance on ex e nal supplie s is ha changes in
public policies and he de elopmen o new echnologies ha e educed ade and communica ion
cos s among e ically linked i ms, s imula ing companies o seek inpu s and componen s om
whe e e hei cos is lowe (Baldwin, 2013). SEZs con ibu e o his cos s educ ion by ax
exemp ions, so ules, be e access o in as uc u es and low wages (Teixei a, 2014). Usually, he
p oduc ion s ages a e de eloped in hese special zones, using impo ed inpu s o be ans o med in
inal o o he in e media e goods o be expo ed.
The In e na ional Labo O ganiza ion es ima ed ha he numbe o employees in he wo ld’s
expo p ocessing zones (EPZ) s ood a 66 million in 2006, excluding China.
2
These SEZs a e
mainly se up in de eloping and eme ging coun ies – especially om he 1990s, when he numbe
o hese zones in pe iphe y economies inc eased signi ican ly –, specializing in he manu ac u ing
o labo –in ensi e p oduced goods, p edominan ly clo hes and elec onic goods (Cling e al., 2005).
O e he pas ew decades, hese zones ha e ecei ed a en ion in deba es on economic and
social de elopmen . Al hough some au ho s (Helle and Kau man, 1963; Bui ela e al., 1999;
Naugh on, 2007) ind ha SEZs b ing economic and social bene i s by a ac ing in es men s and
expanding ade and income in de eloping coun ies, hei economic and social e ec s emain
con o e sial.
Bui ela e al. (1999) and Naugh on (2007) use he examples o maquilado as in Mexico and
special zones in China o e alua e he po en ial economic bene i s o he SEZs. O en specialized
in assembly, hese zones a e he inal s age in he Global Value Chain (GVC). Using indus ial
1
The e m ’SEZ’ co e s a wide ange o mo e speci ic ypes o zones, such as F ee T ade Zones (FTZs), Expo
P ocessing Zones (EPZs), Business Zones, F ee Po s and o he s. Fo desc ip ions and classi ica ions o di e en ypes
o SEZs in he wo ld, see Fa ole (2011), Fa ole and Akinci (2011), and Si oen and Yuce (2014). The In e na ional
Labo O ganiza ion’s (ILO) SEZs da abase epo ed 176 zones in 47 coun ies in 1986 and app oxima ely 3,500 zones
in 130 coun ies by 2006 (Boyenge, 2007). In addi ion, Si oen e al. (2014) ind a ound 1,083 zones (excluding he
Maquilado as and US Fo eign T ade Zones) in 2008 in hei Wo ld FTZ da abase co e ing 158 coun ies. The di e ences
in he numbe o SEZs ound ac oss da abases a e closely linked o he ype o SEZ de ini ion chosen, bu he e is clea
e idence o g ow h in numbe s (Cas ilho e al., 2015).
2
Boyenge (2007) p esen a new es ima ion in he ILO da abase on expo p ocessing zones. See also Si oen e al.
(2014). They cons uc he Wo ld FTZ Da abase ( z.dauphine. ). I syn hesizes he in o ma ion abou he FTZ p og ams
o 158 coun ies and i is collec ed om di e en sou ces, such as NGO epo s, academic a icles, and au ho i y
websi es.
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componen s om all o e he wo ld in hei p oduc ion p ocesses hey ha e consequen ly become
p ominen impo e s o in e media e goods. The au ho s poin ou ha hey ha e con ibu ed o he
deepening o he in e na ional p oduc ion agmen a ion, o he inc ease o ade and also o a ac
o eign di ec in es men (FDI).
Likewise, he p edominan iew o in e na ional o ganiza ions (The Wo ld Bank, WTO, UNC-
TAD) is ha al hough SEZs ope a e in a he singula ways, o en dis espec ing WTO ules – such
as hose in he WTO’s Ag eemen on Subsidies and Coun e ailing Measu es –, hey do encou age
o eign di ec in es men (FDI) sp eading echnology o he es o he economy and c ea ing
posi i e ex e nali ies.
3
They gi e de eloping coun ies he oppo uni y o in eg a e he Global
Value Chain s imula ing ade and economic g ow h.
Rega ding he po en ial social e ec s o SEZs, a he beginning o he 1960’s, Helle and
Kau man (1963) had al eady s a ed o discuss he impo ance o ax exemp ions in he indus y
and income expansion in de eloping coun ies. A he end o he 1980’s F ei as Pin o (1987) was
al eady leading he deba e abou he c ea ion o SEZs a he u n o he cen u y.
4
Naugh on (2007)
examined he po en ial e ec s on he inc eased income le els, echnology and he p o-de elopmen
na u e o SEZs, ocusing he deba e on he special zones in China. Ham e al. (2011) and Busso e al.
(2013) analyze he No h Ame ican Fede al Empowe men Zones p og am, poin ing o posi i e
and signi ican e ec s on local employmen a e and wages as well as po e y a e dec ease.
O he s udies deal mo e speci ically wi h he B azilian ee ade zone, such as Cas ilho e al.
(2010), which add essed he subjec o gende inequali y, showing ha emale employees in he
manu ac u ing indus y in he Amazonas s a e a e subjec o less inequali y compa ed o he es o
B azil. Mo e ecen ly, Cas ilho e al. (2015) looked a he MFTZ po en ial o he local po e y
and inequali y dec eases.
None heless, hese zones can also c ea e dis o ions (due o ax exemp ions, e c.) and ano he
deba e ques ions whe he SEZs b ing ai compe i ion (OECD, Me cosu ). Mo eo e , i s impac
on labo s anda ds and human de elopmen is s ill he subjec o conside able deba e. F equen ly
ques ioned by ci il socie y (Unions, NGOs) and in e na ional o ganiza ions such as he In e na ional
Labo O ganiza ion (ILO), SEZs p ac ices would be p one o igno ing undamen al labo s anda ds.
The weak labo egula ion o hese zones is an a ac i e ac o o mul ina ional companies, wha
co obo a es o negligence na ional labo laws and s anda ds. Cling e al. (2005), Si oen (2012),
Teixei a (2013), Cas ilho e al. (2010) also explo ed labo s anda ds conce ns. They poin ou ha
labo s anda ds in hese zones a e o en neglec ed and wo ke s a e subjec o low wages and poo e
labo condi ions.
3
Fi ms loca ed in SEZ a e o en subjec o expo sha e equi emen s (ESR). i.e., hey mus expo a leas a ce ain
sha e o hei p oduc ion o be eligible o ope a e and enjoy he iscal incen i es a ailable in hese special zones (De e e
and Riano, 2017). The imposi ion o ESR, he e o e, makes he subsidies p o ided o i ms in SEZ con ingen upon
expo pe o mance – a p ac ice p ohibi ed by he Wo ld T ade O ganiza ion’s (WTO) Ag eemen on Subsidies and
Coun e ailing Measu es (De e e e al., 2018).
4
F ei as Pin o (1987) desc ibes he changes in oduced in he Amazon and hei impac s on egional de elopmen
due o he es ablishmen o he Manaus F ee T ade Zone, whe e se e al o eign companies ha e se led in sea ch o
incen i es such as o al o pa ial ax exemp ions, in as uc u e, low wages, among o he ad an ages.
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Recen e iews o desc ip i e case s udies show how social and economic gains om zone
ope a ions a y ac oss coun ies, bu also wi hin coun ies and be ween zones and ime (Agga wal,
2007, 2012; Fias, 2008; Fa ole, 2011).
This s udy examines he deba e abou social beha io based on he case o he Manaus F ee
T ade Zone (MFTZ). This special economic egime was in oduced du ing he 1960’s ollowing
a go e nmen decision o pu sue a g ow h s a egy d i en by impo subs i u ion. The MFTZ
in eg a ed he e ical specializa ion e olu ion, wi hou making expo s a goal. Di e ing om he
usual SEZs and cha ac e ized by wha li e a u e calls an impo ing p ocessing zone, he MFTZ
inal objec i e was he assembling o impo ed componen s o he in e nal ma ke supply (Si oen
and Yuce , 2014). The model was jus one o he s uc u al alignmen policies in oduced by he
mili a y egime a a ime o in e na ional c ises, h ea s o in e na ionaliza ion in he Amazon
o es and he Cold Wa . Jus i ied by he need o de elop and in eg a e he Amazon egion ha had
emained i ually dese ed since he collapse o he ubbe -based economy in he ea ly 1920s, i s
idea and c ea ion led o a shi in he decen aliza ion o capi alis p oduc ion beyond i s o iginal
bo de s. G an ing ax bene i s was necessa y o b ing in es men s o he no h egion because o
i s dis ance om he consume ma ke s, mos ly concen a ed in he sou h and sou heas o B azil.
Thus, he egion needed o o e special condi ions o companies o be se up he e.
Despi e i s c i ics, he MFTZ s a ed ou as a e i able pole o de elopmen o e ing iscal
incen i es om he B azilian go e nmen .
5
The iscal incen i e policies ha e c ea ed a p os-
pe ous indus ial cen e in Manaus, wi h a g owing pa icipa ion o his Amazonian indus y in
na ional p oduc ion. S ic ly supe ised by he Supe in endence o he Manaus F ee T ade Zone
(SUFRAMA), i has allowed compliance wi h labo s anda ds.
6
Mo eo e , he e enue’s gene a ion
h ough new jobs, highe wages and new oppo uni ies signi ican ly imp o ed he s anda ds o
li ing o he local popula ion.7
5
The ini ia i e o implemen and de elop he Manaus F ee T ade Zone has ne e esul ed om a unanimous posi ion
o he B azilian socie y. The discussion is guided by he di e gence in assessing he cos s and bene i s o main aining
he incen i e schemes in he egion. I s c i ics de elop a gumen s on he cos o ax incen i es and he alleged lack o
compe i i eness o he goods p oduced in he Manaus Indus ial Pole.
6
The SUFRAMA has con ol mechanisms and he imposi ion o condi ionali ies o companies o acqui e he a ious
ax ad an ages. Fo a de ailed analysis on he SUFRAMA’s imposi ions, see he SUFRAMA’s Resolu ion N. 203 o
Decembe 10 h 2012.
7
Acco ding o da a p o ided by he B azilian Ins i u e o Applied Economic Resea ch (IPEA – IPEADATA) on he
GDP pe municipali y, in 2010 Manaus concen a ed 25% o he e enue gene a ed in he No he n egion. While
Amazonas ep esen ed 1.4% o he B azilian GDP, Manaus alone (wi h R$ 50,2 billion GDP in 2010), made up 82,4%
o he o al GDP o he s a e o Amazonas. Mo eo e , he Annual Indus ial Su ey by he B azilian Census Bu eau
(PIA/IBGE) epo s ha he sha e o Amazonas – he smalles geog aphical uni in he su ey – in he B azilian
manu ac u ing p oduc ion eached 3.7% in 2010 – while Manaus accoun s o jus 0.9% o he B azilian popula ion.
A e a decade o high g ow h, Amazonas’ manu ac u ing p oduc ion had g own by a ac o o 3.4%, wi h an annual
a e age g ow h a e o 13% (Cas ilho e al., 2015). In e ms o job c ea ion, he de elopmen o comme cial and
indus ial ac i i ies in he MFTZ c ea ed a la ge demand o labo . Acco ding o IBGE da a he popula ion o Manaus
ep esen ed 52.2% o he S a e in 2015 while in 1960 he pe cen age was only 24.3%. Acco ding o PIA / IBGE da a, in
he s a e o Amazonas, manu ac u ing employmen almos doubled be ween 2000 and 2010. The numbe o wo ke s
in manu ac u ing indus ies inc eased om 59 586 o 116 503 in he pe iod – an inc ease o 96% abo e he a e age
o 50%. Acco ding o SUFRAMA da a, he numbe o employees inc eased om 50 005 in 2000 o 103 673 in 2010
(+ 107%) in he MFTZ. On an annual a e age basis, he numbe o companies inc eased om 307 o 431 a he same
pe iod, while he indus ial s uc u e in he Manaus Indus ial Pole emained highly concen a ed.
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Economics: The Open-Access, Open-Assessmen E-Jou nal 14 (2020-19)
This pape desc ibes and e alua e some o he labo and social ou pu s o he a ious iscal
incen i es applied in he Manaus F ee T ade Zone, ha allowed o a g ea e in eg a ion o he
B azilian economy in he in e na ional ade. Ou aim will be o de e mine whe he ac o s in labo
s anda ds and social condi ions in he Manaus Indus ial Pole a e capable o gene a ing posi i e
spillo e s in Manaus and su ounding a eas. Despi e con i ma ion o he exis ence o a posi i e
impac om he MFTZ, his analysis will show ha he bene icial e ec s o he ee ade zone
emain con ained wi hin he bo de s o he municipali y o Manaus.
2 Me hodology and Da a
In o de o empi ically es ima e labo and social condi ions in he MFTZ, his analysis is based
on he s udy o he esiduals – de ia ions be ween an obse ed alue and he es ima ed alue
–, exploi ing wo di e en me hods, as a measu e o obus ness check. The analysis uses c oss-
sec ional da a, a he municipali y le el o he yea 2010. Due o he lack o a ailable da a
conce ning only he pe ime e o he ee ade zone, he MFTZ is ep esen ed by he municipali y
o Manaus, which is compa ed o he o he b azilian municipali ies. The i s model, Model A,
es ima es he expec ed Manaus’ ou pu s by a esiduals analysis, using OLS es ima ion. The second
one, Model B, applies he s ochas ic on ie me hod o e o e m decomposi ion, which shows
he le el o labo s anda dsâ and socialâs e iciency gene a ed by Manaus, using he Maximum
Likelihood es ima ion.
A emp s o cap u e he MFTZâs causal e ec s on wel a e ou comes would call o a coun e -
ac ual o he si ua ion wi hou he MFTZ, which is no possible due o he una ailabili y o eliable
da a.
8
Facing such limi a ions, we ha e ne e heless ied o p o ide a amewo k o compa ison
by applying c oss-sec ional a ia ions ac oss municipali ies ins ead o a empo al compa a i e
analysis.9
2.1 Concep s and Econome ic Speci ici ies
The me hodology implemen ed o bo h esiduals and s ochas ic on ie echniques will use linea
eg ession wi h he O dina y Leas Squa es (Model A) and he Maximum Likelihood es ima ions
(Model B), espec i ely.
In o de o empi ically es ima e wo king and social condi ions in he MFTZ, he main econo-
me ic speci ica ions a e as ollows:
lnyi=β0+
n
∑
j=1
βjlnxj,i+γiεUF +γc+εi(1)
8
We we e unable o ca y ou analyzes om p e ious yea s o build a coun e ac ual o he si ua ion wi hou he MFTZ
since he only B azilian da abase ha allows us o analyze a he municipali y le el is he census, which is ca ied ou
e e y en yea s, and due o he una ailabili y o mic oda a o he census p io o he c ea ion o he MFTZ ( om 1920 o
1960, he e a e only abula ions a s a e and municipali y le el o he main a iables, being published in p in ed o ma ).
9
Fo ou c oss-sec ional analysis, we employ esiduals and social e iciency ankings o a subsample o municipali ies
wi h ’simila ’ cha ac e is ics: s a e capi als and he main B azilian indus ials poles. See Cas ilho e al. (2015); Pica elli
(2014).
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whe e
ln yi
deno es he labo s anda ds and social condi ions in each municipali y
i
. The ec o
xj,i
includes
j
con ol a iables ypically assumed o a ec labo and social condi ions, cap u ing
geog aphic speci ici ies. Ou main speci ica ion includes as con ols: GDP pe capi a, dis ance
om he s a e capi al, geog aphic densi y and u ban popula ion. Finally,
γiεUF
is a s a e speci ic
ixed e ec s, γcis a dummy o s a e capi als, and εiis he e o e m.
We use di e en dependen a iables o each es ima ion Child en no Wo king,Gende
Equali y and E hnic Equali y o labo s anda ds; Li e acy Ra e,Child en wi h li e a e pa en s,
Child en wi h adequa e housing and li ing condi ions,Child en wi h li e a e pa en s & adequa e
housing and li ing condi ions,Less-po e y index and Equali y index o social condi ions. In his
analysis, a smalle incidence o child labo , gende and e hnic wage inequali ies will be ea ed
as a esul o labo s anda ds e iciency while social pe o mances will be analyzed h ough he
illi e acy and po e y a es, he GINI, and he housing and li ing condi ions. Mo eo e , posi i e
coe icien s will be indica ing a educ ion in child labo , an inc ease in gende and e hnic wage
equali y (conside ing ha men a e be e paid han women and ha whi e is be e paid han
non-whi e), a educ ion in illi e acy a e, be e housing and li ing condi ions, smalle Po e y and
smalle GINI. A compa a i e analysis be ween he s a es and municipali ies in B azil has been
ca ied ou in o de o check he exis ence o labo and social e iciency in he MFTZ as well as
posi i e spillo e s om Manaus o i s neighbo ing municipali ies.
In Model A, in which he exis ence o a posi i e Manaus e ec is app oached by he s udy o
he esiduals (model’s de ia ion), we will ocus whe he posi i e alues o he obse ed de ia ions
can be pe cei ed, in o he wo ds, whe he he di e ence be ween he obse ed alue
yi
and he
alue
ˆyi
es ima ed by he eg ession is posi i e. The main idea is o de e mine whe he he obse ed
alue
yi
, which is a gi en social index, is supe io o he alue
ˆ
βxi+ˆ
α
es ima ed by he eg ession.
This posi i e de ia ion would be in e p e ed as a posi i e e ec whe e he obse ed social esul
o each municipali y is highe han he esul expec ed by he model. Thus, in e sely, a nega i e
de ia ion would indica e a nega i e e ec , in which he obse ed social esul is smalle han he
esul p edic ed by he model.
In Model B, we apply he concep o p oduc i e e iciency o social e iciency analysis, using
he s ochas ic on ie me hod. Ra allion (2003) poin s he bene i ha i allows o andom
de ia ions om he on ie , such as due o measu emen e o s o shocks. Aigne e al. (1977) and
Meeusen and B oeck (1977), admi ing he possibili y o a sys em no only o ace p oblems o
ine iciency in i s pe o mance, bu also o be subjec o ex e nal andom ac o s ha can a ec i s
pe o mance, assume he unc ion o p oduc ion as he locus o le els o maximum ou pu ha can
be ob ained wi h a pa icula se o inpu s, o he cu en echnology. I is assumed ha no all
sys ems ha e e icien pe o mances, no being able o p oduce he ou pu o he on ie . Thus, he
e m µ≥0 e lec s he ou pu ’s de ia ion.
Applying his me hod o decomposi ion o e o e ms – S ochas ic F on ie – o ou social
analysis, we conside imunicipali ies ha use Ninpu s o p oduce social pe o mance.
Conside ing Cobb-Douglas echnology, he p oduc ion ou pu o municipali ies is exp essed as
ollows:
lnyi=β0+
n
∑
j=1
βjlnxj,i+νi−µi(2)
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O ,
lnyi=β0+
n
∑
j=1
βjlnxj,i+εi(3)
εi=νi−µi
is he e o e m obse ed in he p oduc ion unc ion.
νi
e lec s he andom
de ia ion while
µi
is he ine iciency e m. The s ochas ic s a is ical me hod conside s
εi
a
compound e m wi h asymme ic dis ibu ion, since he ine iciency e m canno be nega i e
(
µ≥0
).
10
Thus, he model is composed by he di e ence be ween he s ochas ic bounda y
(
lnyi=β0+βlnxi+νi
) and he ine iciency e m (
µi
). I he e ms
νi
and
µi
a e dis ibu ed
independen ly o each o he xi eg esso s, he es ima o s a e consis en and e icien .
One o he main assump ions in p oduc ion unc ion models is ha all p oduc i e uni s ace
simila en i onmen al condi ions. Howe e , his is no he case o he B azilian municipali ies
social eali y since he e a e di e en socioeconomic and poli ical ac o s be ween each loca ion,
illus a ing he ele an independence be ween each uni o he ede a ion. Thus, al hough hey a e
no unde he municipali ies con ol, he omission o a iables ha cap u e di e en en i onmen al
ac o s gene a es a p oblem o he e ogenei y in he model.
Ha ing any o he e o e ms he e oskedas ic ende s he es ima ed pa ame e s no e icien ,
al hough hey emain consis en . The e o e, o include hese cha ac e is ics wi hin his analysis, we
will add ixed e ec s o each ede a i e uni , as well as a dummy o he s a e capi als in he model.
2.2 Da a
The usual da a sou ce in B azilian social and labo s udies is PNAD da a, which is conduc ed
annually, co e ing indi idual in o ma ion on he main socio-economic a iables. None heless, a
signi ican limi a ion made i unsui able o ou s udy: i s ep esen a i eness and co e age do no
ex end o below s a e le el. Hence, in o de o ocus on Manaus, a emaining ep esen a i e a
he municipali y le el, we u ned o census da a. To elabo a e on ou c oss-sec ional analysis, we
used he indi idual/household le el mic oda a om he B azilian census o 2010. I is conduc ed
e e y en yea s by he B azilian Census Bu eau, he Ins i u o B asilei o de Geog a ia e Es a Ãs ica
(IBGE), he las one occu ing in 2010. A de ailed ques ionnai e (ques iona io da amos a) –
including indi idual and household’s in o ma ion on he main socio-economic a iables, such as
he gene al cha ac e is ics o popula ion, educa ion, labo , income, housing, mig a ion, e ili y,
ma iage, heal h, nu i ion – is adminis e ed o a census sample o a ound 11% o he B azilian
popula ion. The su ey samples abou 70 million households and i is na ionally ep esen a i e,
ensu ing co e age o bo h u al and u ban a eas o all he 5.565 municipali ies o he ede a ion.
The da a used o ou con ol a iables we e ob ained om IBGE.
10
As he andom e m can assume any alue, i is common o assume ha his e m ollows a no mal dis ibu ion
νi∼N(0,σν2)
. As he ine iciency e m canno be nega i e, he e a e se e al dis ibu ions ha sa is y his es ic ion,
among hem unca ed-no mal, exponen ial and gamma. In his s udy, we use he unca ed-no mal dis ibu ion, since i
allows he co ec ion o any sou ces o bias in he model, b inging mo e consis en es ima ions.
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In ou s udy, we use he municipali y le el, ob ained by he agg ega ion o he indi idual-le el
in o ma ion. The analysis use in o ma ion conce ning h ee di e en opics on labo s anda ds:
Child Labo , Gende Wage Gap, and E hnic Wage Gap; and six opics on social condi ions:
Illi e acy Ra e, h ee a iables conce ning child en condi ions, he po e y incidence and he GINI
index, assuming he hypo hesis o exogenei y.11 These nine opics a e hen ea ed sepa a ely.
The choice o he labo s anda ds dependen a iables used is based on goals wo, h ee
and ou o he Millennium De elopmen Goals o he Uni ed Na ions De elopmen P og am
(UNDP) – achie e uni e sal p ima y educa ion p omo e gende equali y and educe child mo ali y,
espec i ely – which we e he hemes ha we judged he mos exploi able o deal wi h he labo
s anda ds’ issue. Since we a e in e es ed in dealing wi h he e ec s o he MFTZ on labo s anda ds
and as child labo e e s o he exploi a ion o child en h ough any o m o wo k ha dep i es hem
o hei childhood, hei physical, men al and mo al heal h, o in e e es wi h hei abili y o a end
egula school, we ha e decided o con e objec i es wo and ou o he Millennium De elopmen
Goals o child labo , conside ed one o B azil’s mos signi ican social issue. Rega ding he hi d
goal ela ed o he p omo ion o gende equali y, we ansla ed he opic in o he gende wage
inequali y and b oaden he ea men o he issue o ano he ype o labo disc imina ion such as
e hnic wage dispa i ies, bo h s ill deeply embedded in he B azilian socie y. These ques ions a e
pa icula ly impo an o B azil, hough he child labo has signi ican ly educed since he 1988’s
Cons i u ion. Hence, he dependen a iable ook h ee o ms:
1.
%o Child en no Wo kingi
: Numbe o child en (aged 10-15) who do no wo k/Numbe
o child en (aged 10-15) in he o al popula ion, o he numbe o child en who do no wo k pe
municipali y (IBGE);
2.
Gende Equali yi
: Wage Ra io be ween Women and Men pe municipali y (A e age Wage
o Woman Di ided by A e age Wage o Men) (IBGE);
3.
E hnic Equali yi
: Wage Ra io be ween Non-Whi e and Whi e pe municipali y (A e age
Wage o Non-Whi e Di ided by A e age Wage o Whi e) (IBGE).
The choice o he social condi ions dependen a iables used is based on he Social P og ess
Index’s dimensions. We use six a iables co e ing some aspec s o basic human needs, ounda ions
o wellbeing and oppo uni y, ansla ed in o he issues o illi e acy, child en condi ions and
s anda ds o li ing, po e y and inequali y. These ques ions a e pa icula ly impo an o B azil,
especially om he 2000s, when hey became he a ge o he main social and income ans e
p og ams implemen ed by he go e nmen (P og ama B asil Al abe izado (PBA), B asil Sem
Mise ia, Bolsa Familia, e c.). Thus, he dependen a iable ook six o ms:
11
Endogenei y es s made using lagged con ol a iables as ins umen s (IBGE 2009 and 2008). No co ela ion be ween
a p edic o a iable and he e o e m (no endogenous eg esso s). OLS and IV models p esen ing consis en and
equi alen esul s. OLS can be conside ed consis en and e icien .
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Table 4: Labo S anda ds Reg essions MODEL B18
Sou ce: Sel -Elabo a ion based on Census da a (2010). No es: Reg essions a e weigh ed by he squa e oo o he
numbe o people in a municipali y. S anda d e o s (in pa en heses) a e obus o he e oskedas ici y. * p<0.10; **
p<0.05; *** p<0.01.
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Table 5: Social Reg essions MODEL B
Sou ce: Sel -Elabo a ion based on Census da a (2010). No es: Reg essions a e weigh ed by he squa e oo o he
numbe o people in a municipali y. S anda d e o s (in pa en heses) a e obus o he e oskedas ici y. * p<0.10; **
p<0.05; *** p<0.01.
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Rega ding ou social eg essions in Table 5, an inc ease in he GDP pe capi a and in he
Demog aphic densi y b ings an imp o emen in mos o he social indica o s – excep o he
equali y index – while a g ow h in he dis ance be ween he municipali y and he capi al causes a
wo sening in i e o he es ima ed social a iables – excep o he less-po e y index. Conside ing
he u ban popula ion, an inc ease in he u ban/ u al a io b ings an imp o emen o all six social
indica o s s udied.
Rega ding he ixed e ec s pa ame e s in Tables 4 and 5, as al eady obse ed in Model A, he
labo and social pe o mances coe icien s poin ed o wo s ou comes o Amazonas.
3.3 The Manaus F ee T ade Zone’s Labo E ec in Manaus
In o de o iden i y he o igins o he Manaus e ec , we p edic ed ou es ima ions’ esiduals and
echnical e iciency. Recalling ha posi i e esiduals indica ed esul s we e be e han expec ed
– which means ha he obse ed esul s we e be e han he esul s es ima ed by he model –
in e p e ed as a posi i e Manaus E ec ; he echnical e iciency ep esen s he a io be ween he
obse ed municipali y’s social pe o mance and he a e age social pe o mance p edic ed by he
model.
Looking a he Manaus e ec in he ci y o Manaus i sel , we no e Manaus’ pe o mance is
highe han he esul s p edic ed by he model o all he labo s anda ds and social condi ions’
a iables. I.e., Manaus p esen ed posi i e esiduals o all he a iables in he s udy (Model A).
Manaus is among he i s six capi als when i comes o he app oxima ion o igu es p edic ed
by he model o he % o child en no wo king, he i s ega ding gende equali y and he second
capi al o he e hnic equali y. Rega ding social condi ions Manaus is among he i s wel e
capi als ( om a o al o 27 capi als) when i comes o he app oxima ion o igu es p edic ed by
he model o he li e acy a e, he en h capi al o he child en wi h li e a e pa en s, he second
o child en li ing in adequa e housing and li ing condi ions, he ou h o child en wi h li e a e
pa en s li ing in adequa e housing and li ing condi ions, he i h o less-po e y index and he
hi d o he equali y index. The posi i i y o esiduals p o es esul s we e be e han hose
es ima ed by he model (Fo he comple e labo s anda ds and social condi ions capi als’ ankings,
see he Appendix, Tables 10 and 17).
I we compa e Manaus wi h he wen y municipali ies wi h he highes indus y G oss Value
Added in B azil in 2010, Manaus occupies he i h posi ion in he anking ega ding he pe cen age
o Child en no wo king, he second and he i s posi ions espec i ely conce ning gende and
e hnic equali ies. Conce ning social condi ions, Manaus is in he ou h posi ion when i comes o
he app oxima ion o igu es p edic ed by he model o he li e acy a e, he hi d municipali y
o he child en wi h li e a e pa en s and he i s o child en li ing in adequa e housing and
li ing condi ions, child en wi h li e a e pa en s li ing in adequa e housing and li ing condi ions,
less-po e y index and he equali y index (Fo he comple e labo s anda ds and social condi ions
wen y ci ies’ ankings, see he Appendix, Tables 11 and 18).
We may also commen on he ine iciency pa ame e s gene a ed by Model B, and how hese
esul s app oxima e he esul s ob ained in Model A, ecalling ha he echnical e iciency is he
a io be ween he obse ed a e age social pe o mance o he municipali ies and he a e age social
pe o mance p edic ed by he model.
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Conside ing he labo s anda ds ine iciency capi al’s anking, Manaus occupies he ou h
posi ion among he lowes ine iciency capi als o % o child en no wo king, wi h a echnical
ine iciency o 0.55%. Fo gende and e hnic equali ies, Manaus occupies he i s posi ion, wi h
he lowes echnical ine iciencies o 0.59% and 0.40%. Rega ding he social ine iciency capi al’s
anking, we can obse e wo s posi ions o Manaus ega ding indica o s o li e acy.
19
Manaus is
a he eigh een h and ou een h posi ions, wi h echnical ine iciencies o 1.06% and 1.33% o he
wo li e acy a iables unde s udy. In ela ion o he o he social a iables, we can obse e Manaus
ela i ely well classi ied, p esen ing he second lowes ine iciency pa ame e o child en li ing in
adequa e housing condi ions, he i s o child en wi h li e a e pa en s li ing in adequa e housing
condi ions, he i h o he less-po e y index and he hi d lowes ine iciency o he equali y
index, wi h ine iciencies o 0.68%, 0.12%, 0.49% and 0.52% espec i ely (Fo he comple e labo
s anda ds and social condi ions capi als’ ankings, see he Appendix, Tables 12 and 19).
Fu he mo e, when compa ing Manaus wi h he wen y municipali ies wi h he highes indus y
G oss Value Added in B azil in 2010, i occupies he ou h, he hi d and he i s posi ions
espec i ely, among he municipali ies wi h he lowes ine icency in all he h ee labo s anda ds
a iables. Conce ning social condi ions, Manaus is a he nin h and i h posi ions in he anking
ega ding he wo li e acy a iables unde s udy and he i s posi ion conce ning he wo housing
and li ing condi ions a iables, he less-po e y index and he equali y index, being among he less
ine icien municipali ies. (Fo he comple e labo s anda ds and social condi ions wen y ci ies’
ankings, see he Appendix, Tables 13 and 20).
3.4 The Manaus F ee T ade Zone’s Labo E ec on he S a e
In e ms o he Manaus e ec on i s su oundings, posi i e spillo e s om he ee ade zone o
o he municipali ies in he s a e o Amazonas we e p obably weak o inexis en . As shown in
Tables 2, 3, 4, 5 om models A and B, he coe icien s o labo s anda ds and social condi ions
in he Amazonas s a e a e lowe han o o he B azilian s a es, wha can be a ibu ed o he
exis ing egional disc epancies ega ding economic ac i i ies de eloped by he local labo o ce
and signi ican social backwa dness in nume ous municipali ies in he es o he s a e.
As we e alua e Manaus’ neighbo ing municipali ies, such as hose close o Manaus belonging
o he meso- egion o Cen o Amazonense, al hough we obse e highe le els o GDP and GDP
pe capi a (Table 6), we no e ha he main economic ac i i ies de eloped in hese e i o ies seem
o ha e li le o no ela ion o he ac i i ies pe o med in he Manaus Indus ial Pole. Ag icul u e,
ca le and ex ac i e ac i i ies a e one o he p ima y sou ces o income o hese municipali ies.
Mo eo e , he i on-o e ac i i ies a e well-de eloped in he egion, especially in municipali ies
bo de ing he s a e o Pa a. Al hough municipali ies such as Coa i and P esiden e Figuei edo
p esen signi ican pa icipa ion o he indus y in he local economy, o e coming he sec o s
o se ices and a ming (Table 6), hey a e cha ac e ized by adi ional indus y ac i i ies, wi h
low echnological con en (logging, ex iles, ood, ishing, ...), di e ing om he sec o s o high
echnology (elec onics, chemical, ...) ins alled in he Manaus indus ial pole.
19 Despi e be e pe o mances o he s a e o Amazonas p esen ed by ou ixed e ec s when compa ed o s a es in he
no heas egion (see Table 16 in he Appendix)
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Rega ding he municipali ies o he o he meso- egions, e en hose well classi ied in he GDP
and GDP pe capi a ankings o he Amazonian dis ic s (Table 6), he meso- egion Sudoes e
Amazonense economically s ands ou o ag icul u e and ca le ac i i ies. Towns such as Taba inga,
howe e , p esen s a mo e de eloped e ia y sec o (Table 6). The p oximi y o he Colombian
bo de is a ac o o dynamism in he egion since ade s buy hei me chandise a lowe p ices in
Colombia o esell a he local B azilian ma ke . Likewise, municipali ies in he meso- egions No e
Amazonense and Sul Amazonense s and ou o a ming ac i i ies, he egions’ p ima y sou ce
o income (Table 6). Howe e , hese h ee egions ha e e y de icien economic pe o mances i
compa ed o he eas o Amazonas, con i ming he economic backwa dness p e alen in mos o
he s a e o Amazonas.
Table 6:
G oss Value Added / GDP by sec o , GDP and pe capi a GDP (2010) - 20 municipali ies wi h he highes
GDP in he s a e o Amazonas
Sou ce: Sel -elabo a ion based on IBGE
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Rega ding egional social dispa i ies, Figu e 1 p esen s an in e es ing eali y: while he eas o
he s a e p esen ed be e indexes o social p og ess, ollowing an indus y-based de elopmen , a
la ge ex en o e i o ies in he wes p esen ed he wo s le els o social ad ancemen .20
The main ac i i ies de eloped in mos o he Amazonas’ municipali ies a e no ela ed o he
ope a ions pe o med in he MFTZ; and besides, a la ge ex en o Amazonas e i o ies is occupied
by he Amazon o es . Economically based on mining, a ming and o es y en , he majo i y o
hese dis ic s, mainly loca ed in he wes o he s a e, expe ience signi ican u ban de elopmen
delay.21
Figu e 1: Social P og ess Index in he s a e o Amazonas
Sou ce: Amazon Ins i u e o People and he En i onmen - 2014 (Imazon)
20
The Social P og ess Index is an agg ega e index o social and en i onmen al indica o s ha cap u e h ee dimensions
o social p og ess: Basic Human Needs, Founda ions o Wellbeing, and Oppo uni y. I measu es he ex en o which
coun ies p o ide o he social and ecological needs o hei ci izens, conside ing he well-being o a socie y by
obse ing social and en i onmen al ou comes di ec ly a he han he economic ac o s. The social and en i onmen al
ac o s include wellness (including heal h, shel e and sani a ion), equali y, inclusion, sus ainabili y and pe sonal
eedom and sa e y. The index is published by he nonp o i Social P og ess Impe a i e, and is based on he w i ings o
Ama ya Sen, Douglass No h, and Joseph S igli z.
21
Mo eo e , acco ding o Cas ilho e al. (2015), con as ing esul s on po e y and inequali y educ ion in Manaus and
in he es o Amazonas would be illus a ing he bene i s and he limi s o he Manaus F ee T ade Zone’s in luence.
The au ho s s ess ha while labo incomes (p opo ion o o al mon hly household income pe capi a ea ned om all
households membe s’ jobs) played a c ucial ole in educing po e y and inequali y in he municipali y o Manaus o e
he yea s 2000-2010, his is no he case in he es o he s a e o Amazonas, whe e non-labo income ( e i emen ,
pensions, en s, social ans e s, unemploymen insu ance and o he s) explained he decline o po e y and inequali y.
This eali y migh con i m he hypo hesis in which i s posi i e impac s seem o emain wi hin Manaus.
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Ou analysis con i ms he indings in Model A; ha he posi i e Manaus e ec on labo
s anda ds and social condi ions is eal, bu i emains s uck inside Manaus.
We conclude his in es iga ion by e i ying he co ela ion be ween he
εi
o Model A and he
µio Model B, ecalling ha εi=νi−µion Figu e 2.
The g aphs show a s ong nega i e co ela ion be ween he e m o e o
εi
om Model A and
he echnical ine iciency
µi
om Model B, ollowing an exponen ial ela ionship and con e ging
o wha is expec ed by he li e a u e. Thus, we deduce ha he esiduals ob ained in Model A would
be su e ing a li le andom in luence, indica ing ha esiduals de ia ions would be cap u ing he
sys em’s e iciency and gua an eeing obus ness in bo h models.
Figu e 2: Co ela ion be ween εiand he µi
Sou ce: Sel -Elabo a ion based on da a om he 2010 B azilian census (IBGE)
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4 Conclusion
The c ea ion o he Manaus F ee T ade Zone had a de elopmen pu pose in he B azilian poli ical,
economic and social scena io be ween 1960 and 1970. This indus ial pole was an impo an
de ice in achie ing he desi ed de elopmen , popula ing a egion conside ed, a he ime, dese ed
and p o ec ing i om ex e nal h ea s. I has gua an eed he de elopmen o labo s anda ds in
he Manaus dis ic and has become he main d i ing o ce behind egional employmen , highe
sala ies and g ow h o e he las decades.
This in es iga ion con i ms he exis ence o a posi i e Manaus social e ec due o he igid
checks conduc ed by SUFRAMA and he s ic espec o labo s anda ds applied o he MFTZ.
Hence, he esiduals analysis in Model A sugges ed Manaus p esen ed be e esul s han he
model’s p edic ion, which co obo a es wi h he hypo hesis o he exis ence o a posi i e Manaus
e ec in e ms o labo and social ou comes. Conce ning esul s ob ained in Model B, hey a e
qui e simila o hose ob ained in Model A. The s ochas ic on ie analysis showed Manaus had
supe io pe o mances in mos labo and social indica o s, con i ming he conclusions al eady
aken om Model A.
None heless, he pe sis ence o signi ican inequali ies among Amazonas’ municipali ies would
be a es ing ha he bene i s o he MFTZ’s model do no c oss he bo de s o he Manaus’ dis ic .
The high pe o mances o Amazonas in compa ison o o he s a es ega ding income gene a ion
and labo came om Manaus and mos o he posi i e ou comes in he Manaus Indus ial Pole
could no compensa e o he egional inequali ies and socioeconomic backwa dness in nume ous
municipali ies in he es o he s a e. When analyzing Manaus’ neighbo ing owns, al hough we
obse e highe economic pe o mances, we no e ha he main economic ac i i ies de eloped in
hese e i o ies seem o ha e li le o no ela ion o he ac i i ies de eloped in he Manaus Indus ial
Pole. Fa ming and ex ac i e ac i i ies a e he p ima y sou ces o income o hese municipali ies,
like in he es o he Amazonas s a e. These indings indica e economic linkages in he egion a e
s ill weak and jus i y he wo s es ima ions ob ained by Amazonas when compa ed o o he s a es
in he no he n egion and in he es o B azil, making us ejec he hypo hesis abou he exis ence
o signi ican posi i e spillo e s om Manaus o i s su oundings.
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A Labo S anda ds
Table 7: Labo S anda ds Reg essions MODEL A
Sou ce: Sel -Elabo a ion based on Census da a (2010). No es: Reg essions a e weigh ed by he squa e oo o he
numbe o people in a municipali y. S anda d e o s (in pa en heses) a e obus o he e oskedas ici y. * p<0.10; **
p<0.05; *** p<0.01.
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Al hough Manaus p esen ed s ong labo e iciency, occupying op posi ions in he ankings o
capi als and la ge indus ial conglome a es ega ding child labo ’s educ ion and g ea e gende
and e hnic equali y, hese good pe o mances we e no capable o imp o ing he Manaus’ posi ions
in compa ison wi h o he municipali ies o he s a e in e ms o inequali ies. La ge u ban conglom-
e a es end o concen a e highe le els o dispa i ies (Kuzne s, 1971; Taques and Piza, 2009), a
ac ha explains he wo s s a is ics p esen ed by Manaus when compa ed o municipali ies in he
es o Amazonas (Table 8).
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B Social Condi ions
Table 14: Social Reg essions MODEL A
Sou ce: Sel -Elabo a ion based on Census da a (2010). No es: Reg essions a e weigh ed by he squa e oo o he
numbe o people in a municipali y. S anda d e o s (in pa en heses) a e obus o he e oskedas ici y. * p<0.10; **
p<0.05; *** p<0.01.
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Despi e Manaus’ social e iciency, he wo s s a is ics p esen ed by Manaus when compa ed o
municipali ies in he es o Amazonas (Table 15) ega ding he GINI index migh be explained
by he heo y, in which la ge u ban se lemen s end o concen a e highe le els o inequali ies
(Kuzne s, 1971; Taques and Piza, 2009).
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Table 15: Ranking o Social Indica o s o Amazonas ci ies
Sou ce: Sel -Elabo a ion based on da a om he B azilian census 2010 (IBGE)
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Table 16: Social Reg essions MODEL B
Sou ce: Sel -Elabo a ion based on Census da a (2010). No es: Reg essions a e weigh ed by he squa e oo o he
numbe o people in a municipali y. S anda d e o s (in pa en heses) a e obus o he e oskedas ici y. * p<0.10; **
p<0.05; *** p<0.01.
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Table 17: Ranking o Social Indica o s Residuals (Model A) - pe capi al (2010)
Sou ce: Sel -Elabo a ion based on da a om he B azilian census 2010 (IBGE)
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Table 18:
Ranking o Social Indica o s Residuals (Model A) - pe 20 municipali ies wi h he highes indus y G oss
Value Added in B azil, pe a iable (2010)
Sou ce: Sel -Elabo a ion based on da a om he B azilian census 2010 (IBGE)
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Table 19: Ranking o Social Indica o s Ine iciency (Model B) - pe capi al (2010)
Sou ce: Sel -Elabo a ion based on da a om he B azilian census 2010 (IBGE)
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Table 20:
Ranking o Social Indica o s Ine iciency (Model B) - pe 20 municipali ies wi h he highes indus y G oss
Value Added in B azil, pe a iable (2010)
Sou ce: Sel -Elabo a ion based on da a om he B azilian census 2010 (IBGE)
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