Foreign-Trade Zones: A Factor in Manufacturing Employment

Abstract

Foreign-Trade Zones are areas in which companies can manipulate their inputs and finished goods without paying any Customs duties or government excise taxes on the foreign parts and merchandise. This being the case, zones help u.s.-based manufacturers maintain their cost competitiveness in the international and domestic markets by providing a location where the firms can obtain inputs at the lowest possible cost. Often, these components are foreign goods that would otherwise have quota restrictions or tariffs applied which increase their cost. The benefits of the Foreign-Trade Zones program are not restricted to the manufacturers and other companies that take advantage of the opportunities afforded to them by the Zones. The economic welfare of the entire nation is influenced by this program which, its proponents assert, promotes the increase of capital investment and the stabilization and the creation of employment opportunities in the United states. The focus of the following statistical analysis is the employment growth rate in the manufacturing sector of the economy. Of the eight independent variables, particular interest is directed toward the impact of Foreign-Trade Zones on the changes in the manufacturing employment between 1983 and 1986. Conclusions to the analysis support the assertions of the advocates of this trade program; with this data, Zones are a positive force in the growth rate for manufacturing jobs. Following the paper on Foreign-Trade Zones are materials relating to the work accomplished by the author while an intern at the Rockford council of 100. These materials begin with a work journal which explains the various activities, tasks and projects addressed and CXll11pleted during the Fall of 1989. The next section provides examples of the work undertaken such as letters written in response to requests for information, demographics compiled on the City of Rockford and the surrounding area, and surveys developed to maintain current listings of available land and buildings and of industrial parks in the area. The last section to the paper is a thoughtful discussion of how the work experience in economic development at the Council of 100 relates to the background and goals of this student. Economic development approaches the market and its functions from a different viewpoint than what one focuses on when studying Economics at Kalamazoo College; each one emphasizes different components in the system. Both the WFSIP and the previous career Development internships at the Council of 100 were positive and encouraging experiences. Aggressively marketing a city to attract new businesses to that area presents interesting and compelling challenges which could certainly be one step in my career's evolutionary path.