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Export processing zone
A Review of the Role and Impact of
Export Processing Zones

Dorsati Madani

Address:
PREM- EP
The World Bank
EM: dmadani@worldbank.org

CONTENTS:
Acknowledgments
Disclaimer
List of Abbreviations
Executive Summary
I. Introduction and Definition
A. Definition:
A1. What are EZPs
A2. Characteristics and goals
A3. Why do countries use EPZ and EPF schemes?
II. The Economic arguments for and against EPZs.
A. Foreign exchange earning potential
B. Tax revenue/tax loss effects
C. FDI: catalyst effects
D. FDI: technology transfer, knowledge spillover and backward linkages
E. Employment effect on local/national economy
F. Women and EPZ employment
G. Education/training benefits (human capital development)
H. Wages, labor and safety laws
I. Environmental issues
J. EPZs and the economic and policy environments
III.

EPZs, Globalization, Regional Integration Agreements and WTO
A. EPZs in the context of regional integration/trade arrangements
B. The Uruguay Round, export subsidies and EPZs

IV. The administrative and regulatory environment
A.
B.
C.
D.
E.

Open or closed production area?
Location and infrastructure
Government involvement and institutional needs
Geographical position of the country and access to international markets
Summary of practical lessons for a successful zone

V. The actual experience: two African cases
A. Mauritius
B. Senegal
2

VI. Policy Suggestions
Annex A: Brief review of theories regarding EPZs
Annex B: Brief notes on some African EPZs.
A. Togo
B. Namibia
C. Kenya
D. Cameroon
E. Zimbabwe
References
List of Tables:
Table 1: Incentives and provisions offered in EPZs in the Caribbeans and Central America
Table 2: Incentives and provisions offered in EPZs in select Sub-Saharan African countries
Table 3: Impact of EPZs in select Sub-Saharan African countries
Table 4: Impact of EPZs in select countries
Table 5a: Industrial concentration of select zones
Table 5b: Industrial Concentration


References: Africa Analysis. 1990. “Togo’s Open Door to Hong Kong”, No. 91, February. Alter, R. 1991. “Lessons from the Export Processing Zone in Mauritius” in Finance and Development, 12/91, 7-9. Amirahmadi, H. and W. Wu, 1995. “Export Processing Zones in Asia” in Asian Survey, vol. Bhattacharya, D. 1998. Export Processing Zones in Bangladesh: Economic Impact and Social Issues. Bailey, P., A. Parisotto and G. Renshaw (eds). 1993. Multinationals and Employment - Global Economy of the 1990s Beladi, H. and S. Marjit. 1992. “Foreign Capital and Protectionism” in Canadian Journal of Economics, Vol Bermudez, S. 1993. “The Case for Private Free Zones” in Richard L. Bolin (ed.) Public Vs. Private Free Zones. The Flagstaff Institute, 1993. Bermudez, S. 1990. “ Linking the Maquiladoras (EPZs) to Local Industry” in Richard L. Bolin (ed.) Linking the Export Processing Zone to Local industry Bermudez, S. 1996. “Mexico” in Richard L. Bolin (ed.) Impact of 57 New Export Processing Zones in Mercosur, The Flagstaff Institute. Broad, R. and J. Cavanagh. 1993. Plundering Paradise - The Struggle for the Environment in the Philippines Chen, Xiangming. 1995. “The Evolution of Free Economic Zones and the Recent Development of Cross-National Growth Zones” in mystery source. Coste, C and M. L. Ewane. 1990. “Miracle ou Mirage?” Jeune Afrique, July 1990. Curimjee, A. 1990. “Linkages in Mauritius” in R. L. Bolin (ed.) Linking the Export Processing Zone to Local industry Devereux, J. and L.L. Chien. 1995. “Export Zones and Welfare: Another Look” in Oxford Economic Papers 47, 1995, 704-713. Dijkstra, G. and J. van der Wijk. 1996. “Export Promotion in Costa Rica” in latin America’s New Insertion in the World - Towards Systemic Competitiveness in Small Economies by R. Buitelaar and P. van Dijck, 1996. Mac Millan Press, LTD. Dijkstra, G. and C. R. Aleman. 1996. “The Export Processing Free Zone of San Bartolo in El Salvador” in latin America’s New Insertion in the World - Towards Systemic Competitiveness in Small Economies. Edited by R. Buitelaar and P. van Dijck, 1996. Mac Millan Press, LTD. Dunn, L. 1994. “Education of Women Workers in Caribbean Export Processing Zones: Challenges and Opportunities” in Labour Economics, No Easterly, W. 1993. “How Much do Distortions Affect Growth?” in Journal of Monetary Economics 32, 187-212. Felah, F. 1994. “the Role and Activities of Offshore Companies in the Tunisian Economy”, mimeo. Fiji Reserve Bank, 1993. “ The Tax Free Factory/Tax Free Zone Scheme in Fiji” in Pacific Economic Bulletin, vol Hamada, K. 1974. “An Economic Analysis of the Duty Free Zone” in Journal of International Economic, Vol 4, 225-41. Hood, R. and D. Radack. 1997. Trade and Trade Taxes Projects. Draft. International Trade Division ILO. 1998. Labour and Social Issues Relating to Export Processing Zones. Geneva. ILO/UNCTC. 1988. Economic and Social Effects of Multinational Enterprises in Export Processing Zones Jenkins, M., G. Esquivel and Felipe Larrain B. 1998. “Export Processing Zones in Central America” Johansson, H. 1994. “The Economics of Export Processing Zones Revisited” in Development Policy Review, vol Kapata, D. 1994/95. “Zimbabwe: Free Trade Zone” in Southern African Economist, December 94/January 95, 29-30. Keesing, D.B. 1992. “Trends in Export Processing Zones”, background paper to The World Bank 1992 publication: Export Processing Zones. Kpor, C. 1990. “Investors’ Paradise” in West Africa, No. 3818, 10/29-11/4 1990. Kwang-kuk, C. 1990. “The Outprocessing Linkages in Korean EPZs”, in R. L. Bolin (ed.) Linking the Export Processing Zone to Local industry Lewis, B. 1990. “Linkages in Jamaica” in R. L. Bolin (ed.) Linking the Export Processing Zone to Local industry Matusz. S. 1997. “Adjusting to Trade Liberalization”. Draft of Chapter three of the 1997 Global Economic Prospects, the World Bank. Ministry of Economic Planning and Development. 1994. Economic Indicators – An Occasional Paper , Issue no Ministry of Economic Planning and Development. 1996. Mauritius Economic Review : 19921995, Port Louis, Mauritius. Morna, C. L. 1990. “Africa’s Switzerland?” in Africa Report, September/October, pg 3638. Mungaray, E.M. 1995. “La Industria Maquiladora en Tijuana: Riesgo Ambiental y Calidad de Vida” in Commercio Exterior, vol Namib Times. 1995. “EPZ is Still on Track”. November 7, 1995, 18. Namib Times. 1995. “ Namibia’s EPZ Policy and Structures”. November 7, 1995, 19. Offshore Outlook. 1995. volume 3, issue 29, March. Ocheng, M. 1991. “Export-Processing Zones Draw Lukewarm Investor Response” in African Business, April 1991, 16.
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