Export Processing Zones and Special Economic Zones as Generators of Economic Development: The Asian Experience

Abstract

ABSTRACTABSTRACTThis article aims to examine the general concept of free zones, which includes different types of developments ranging from customs-bonded warehouses/factories, export processing zones (EPZs) and special economic zones (SEZs) to free ports or comprehensive free trade zones. Special emphasis is placed on discussing the objectives and characteristics of adopting a strategy of export-led growth by way of establishing EPZs/SEZs in the Asian region. Major differences between EPZs in countries with market economies and SEZs in a socialist country (China) are brought out. Performance of Asian EPZs/SEZs is evaluated in terms of achievements in attracting foreign investment, earning foreign exchange, export growth, employment generation, transfer of technology, backward and forward domestic linkages and regional development. Common problems encountered by the Asian zones include inadequate infrastructure provision, social problems due to the high percentage of female workers and the exploitation of the indigenous labour force, inefficient government administration and low standards of management, vulnerability to changing conditions in the world economy as well as competition among themselves because of similar products and markets. Despite great regional variations in the success of EPZs/SEZs, the continuing growth in the number of such zones indicates an increasing interest on the part of Asian governments to adopt the EPZ or similar systems as generators of economic growth.