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Export Processing Zones in Madagascar: the impact of the dismantling of clothing quotas on employment and labour standards

Author

Listed:
  • Jean-Pierre Cling

    (DIAL)

  • Mireille Razafindrakoto

    (DIAL, IRD, Paris)

  • François Roubaud

    (DIAL, IRD, Paris)

Abstract

(english) The success of Export Processing Zones (EPZs) or the Zone Franche in Madagascar is, with the exception of Mauritius, an isolated and unrecognized case in Africa. The Zone Franche has had a highly significant macroeconomic impact in terms of exports and jobs. Madagascar became the number two clothing exporter in sub-Saharan Africa. At its peek in 2004, the Zone Franche employed 100,000 employees. The final phase-out of the Multi-Fibre Arrangements in 2005 has had a negative impact on the Zone Franche. The export and employment growth has come to a halt. Our econometric estimates, based on first-hand data, show that average wages in the Zone Franche have become lower than in the formal industrial sector, other things being equal; labor standards are higher than average but are progressively being reduced in a context of increased international competition. As the example of Madagascar shows, EPZs can no longer be placed at the core of development and employment policies in Africa since the end of clothing quotas, although no alternative strategy has emerged yet. _________________________________ (français) Le succès de la Zone franche malgache est un cas méconnu et unique en Afrique sub-saharienne, si on excepte l'Ile Maurice. La Zone franche a eu un impact macro-économique important en termes d'exportations et d'emplois. Madagascar est ainsi devenu le deuxième exportateur de produits de l'habillement en Afrique sub-saharienne. A son maximum en 2004, la Zone franche comptait 100.000 employés. Le démantèlement final des quotas imposes dans le cadre des Accords Multi- Fibres depuis le début de 2005 a eu un impact négatif sur la Zone franche. La croissance des exportations et de l'emploi s'est interrompue. Nos estimations économétriques, basées sur des données individuelles auprès des ménages de première main, montre que les salaires dans la Zone franche sont devenus inferieurs a leur niveau dans le reste du secteur industriel formel, toutes choses égales par ailleurs. Par ailleurs, les normes de travail hors salaires restent meilleures mais cet avantage est en réduction progressive, dans un contexte de concurrence internationale accrue. Comme le montre l'exemple de Madagascar, les zones franches d'exportation ne peuvent plus être mises au centre d'une stratégie de développement et d'emploi en Afrique depuis la fin des quotas textiles, bien qu'aucune alternative n'ait encore émerge.

Suggested Citation

  • Jean-Pierre Cling & Mireille Razafindrakoto & François Roubaud, 2007. "Export Processing Zones in Madagascar: the impact of the dismantling of clothing quotas on employment and labour standards," Working Papers DT/2007/06, DIAL (Développement, Institutions et Mondialisation).
  • Handle: RePEc:dia:wpaper:dt200706
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    References listed on IDEAS

    as
    1. Takayoshi Kusago & Tzannatos, Zafiris, 1998. "Export processing zones : a review in need of update," Social Protection Discussion Papers and Notes 20046, The World Bank.
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    Cited by:

    1. Christophe Nordman & Faly Rakotomanana & Anne-Sophie Robilliard, 2009. "Gender Disparities in the Malagasy Labour Market," Working Papers DT/2009/08, DIAL (Développement, Institutions et Mondialisation).
    2. Drusilla K Brown & Alan V Deardorff & Robert M Stern, 2013. "Labor Standards and Human Rights: Implications for International Trade and Investment," World Scientific Book Chapters, in: Zdenek Drabek & Petros Mavroidis (ed.), Regulation of Foreign Investment Challenges to International Harmonization, chapter 5, pages 153-195, World Scientific Publishing Co. Pte. Ltd..
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    5. Nordman, Christophe J. & Rakotomanana, Faly & Roubaud, François, 2016. "Informal versus Formal: A Panel Data Analysis of Earnings Gaps in Madagascar," World Development, Elsevier, vol. 86(C), pages 1-17.
    6. Ruwan Jayasuriya, 2008. "The Effects of Globalization on Working Conditions in Developing Countries : An Analysis Framework and Country Study Results," World Bank Publications - Reports 11765, The World Bank Group.
    7. Mireille Razafindrakoto & François Roubaud & Jean-Michel Wachsberger, 2012. "Nature et fonction du secteur informel : une analyse de la satisfaction dans l'emploi au Vietnam," Working Papers DT/2012/10, DIAL (Développement, Institutions et Mondialisation).
    8. Julia Vaillant & Michael Grimm & Jann Lay & François Roubaud, 2014. "Informal sector dynamics in times of fragile growth: The case of Madagascar," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 26(4), pages 437-455, September.
    9. World Bank, 2010. "Burkina Faso - Promoting Growth, Competitiveness and Diversification : Country Economic Memorandum, Volume 3. Enhancing Growth Factors," World Bank Publications - Reports 12359, The World Bank Group.
    10. Morris, Mike & Staritz, Cornelia, 2014. "Industrialization Trajectories in Madagascar’s Export Apparel Industry: Ownership, Embeddedness, Markets, and Upgrading," World Development, Elsevier, vol. 56(C), pages 243-257.
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    12. Mireille Razafindrakoto & François Roubaud & Jean-Michel Wachsberger, 2014. "Jalons pour une économie politique de la trajectoire malgache : une perspective de long terme," Working Papers DT/2014/21, DIAL (Développement, Institutions et Mondialisation).
    13. Cornelia Staritz & Mike Morris, 2013. "Local embeddedness and economic and social upgrading in Madagascar’s export apparel industry," Global Development Institute Working Paper Series ctg-2013-21, GDI, The University of Manchester.
    14. Marta Castilho & Marta Menéndez & Aude A. Sztulman, 2015. "Poverty and Inequality Dynamics in Manaus: Legacy of a Free Trade Zone?," Working Papers halshs-01245394, HAL.
    15. Chandra, Vandana & Osorio Rodarte, Israel, 2009. "Options for Income-Enhancing Diversification in Burkina Faso," MPRA Paper 20928, University Library of Munich, Germany.

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    More about this item

    Keywords

    Export processing zones; employment; wages; labour standards; Madagascar; zones franches; emploi; salaires; normes de travail.;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • J81 - Labor and Demographic Economics - - Labor Standards - - - Working Conditions
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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