Economic activity in Uruguay's 12 authorized free trade zones in 2010 gave direct employment to 13,000 people and represented 1.7% of the country's gross domestic product (GDP) that year, according to a new study by the Economic Commission for Latin America and the Caribbean (ECLAC), which stresses that these areas have also contributed to diversifying Uruguay's exports of goods and services.
The report A case of Productive and Commercial Transformation: Free Trade Zones in Uruguay analyzes the recent evolution of economic activity, foreign trade and employment among the companies located in these areas, using figures from the censuses of free trade zones in 2007 and 2010 that were carried out by the country's National Statistics Institute.
The document explains that Uruguayan free trade zones have contributed to diversifying the country's exports because big companies produce industrial goods on a much larger scale there than in the rest of the local economy and because they are used as regional distribution centers for merchandise and as a platform for exporting global services.
Overall, goods and services exports from Uruguayan free trade zones totaled nearly $2 billion dollars in 2010, of which roughly $600 million went to other countries in Latin America and the Caribbean, including $241 million within the Mercosur bloc, while another $543 million went to the European Union.
By sector, the commercial shipments went mainly to the Mercosur bloc and the rest of Latin America and the Caribbean, while industrial goods were sent primarily to Europe and Asia. Global services were concentrated in the United States market, although they also showed some degree of regional insertion.
If one looks at gross value added, which measures the additional value that goods and services acquire upon being transformed via production processes, the activity level in free trade zones showed a 31% annual growth rate based on an increase from $635 million dollars in 2007 to $1,427 million in 2010, which represented 1.7% of Uruguay's GDP that year.
The rise was driven mainly by the manufacturing industry, in particular the start of operations at the cellulose plant in Fray Bentos, Uruguay. In addition, manufacturing activity generated more than half (53%) of the gross value added in free trade zones during 2010. Logistical intermediation ranked second with 22% of the total.
Meanwhile, there were 1,400 companies registered in Uruguay's free trade zones in 2010 but 28% of those were inactive. Of the 1,030 active companies, 27% were dedicated to the commercial intermediation of merchandise coming into the country, while the financial, professional services and trading (commercial intermediation without merchandise being physically moved) sectors accounted for 17% each.
The free trade zones gave direct employment to 13,327 people in 2010, about 2,000 more than in 2007, which reflects annual growth of 6%. Of those employees, 10,086 were staff members.
With regard to wages, the salaries that grew the most were in the manufacturing industry (24% annual) while the highest salaries went to employees in the financial sector, with $53,593 dollars a year in 2010-about double the average of $25,058 dollars.
Under Uruguayan legislation, free trade zones are enclosed and isolated areas administered, supervised and monitored by the Economy and Finance Ministry.
Each free trade zone can be used by the state or by private entities authorized by the state, and the companies established there cannot carry out activities outside those zones. These companies receive special benefits, including tax exemptions.
