Export processing zones : a review in need of update

Abstract

In the last three decades, the effects of export-oriented industrialization have called into question the once popular import substitution strategies. This change has been parallel to the development of Export Processing Zones (EPZs). Though initially found in a small number of countries, mainly ASEAN ones, such as Hong Kong (China), the Republic of Korea, and Singapore, EPZs are now found in more than 90 countries. The EPZ's role is typically seen as an instrument for expanding and modernizing the host economy through additional investment/capital formation, technology transfer, and employment generation. In addition to these direct effects, EPZs are expected to create ripple effects on the rest of the economy. The objective of this report is to update some issues and studies on export processing zones (EPZs). It first provides a brief overview of trends in EPZs and then discusses a series of issues such as investment and types of industry in EPZs (incentive scheme, foreign ownership, types of industry, and labor composition), technology transfer (backward linkages and skill formation), and workers in EPZs (wages, working conditions, and trade unions). In the last section, the report discusses lessons from different EPZ experiences and the future agenda.

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