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POVERTY DYNAMICS IN MANAUS: LEGACY OF A FREE TRADE ZONE?

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This study contributes to the literature on the social impacts of Special Economic Zones by analyzing the dynamics of poverty in the Brazilian state of Amazonas, where the Free Trade Zone of Manaus (FTZM) is located. Using census data, statistical micro-decompositions and counterfactual simulations, we show that labor income was a major driver of poverty declines for the municipality of Manaus in the 2000-2010 decade. Comparison with ex-ante ‘similar’ municipalities, in terms of distributional and demographic criteria, corroborates a relative success in terms of poverty reduction in Manaus as well as the essential role played by labor income. Non-labor income was far more important in the rest of the state of Amazonas. These contrasting results help illustrate both the benefits and limitations of the influence of the FTZM, and suggest that a better targeting of both social policies and training programs could improve distributional outcomes in the whole area.