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

Listed author(s):
  • Jean-Pierre Cling



  • Mireille Razafindrakoto


    (DIAL, IRD, Paris)

  • François Roubaud


    (DIAL, IRD, Paris)

(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.

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Paper provided by DIAL (Développement, Institutions et Mondialisation) in its series Working Papers with number DT/2007/06.

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Length: 20 pages
Date of creation: Sep 2007
Handle: RePEc:dia:wpaper:dt200706
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  1. Aaditya Mattoo & Devesh Roy & Arvind Subramanian, 2003. "The Africa Growth and Opportunity Act and its Rules of Origin: Generosity Undermined?," The World Economy, Wiley Blackwell, vol. 26(6), pages 829-851, June.
  2. Gibbon, Peter, 2003. "The African Growth and Opportunity Act and the Global Commodity Chain for Clothing," World Development, Elsevier, vol. 31(11), pages 1809-1827, November.
  3. Cling, Jean-Pierre & Razafindrakoto, Mireille & Roubaud, Francois, 2005. "Export processing zones in Madagascar: a success story under threat?," World Development, Elsevier, vol. 33(5), pages 785-803, May.
  4. repec:dau:papers:123456789/4457 is not listed on IDEAS
  5. Martins, Pedro S., 2004. "Do Foreign Firms Really Pay Higher Wages? Evidence from Different Estimators," IZA Discussion Papers 1388, Institute for the Study of Labor (IZA).
  6. International Monetary Fund, 2003. "Madagascar; Selected Issues and Statistical Appendix," IMF Staff Country Reports 03/7, International Monetary Fund.
  7. Kankesu Jayanthakumaran, 2003. "Benefit-Cost Appraisals of Export Processing Zones: A Survey of the Literature," Development Policy Review, Overseas Development Institute, vol. 21(1), pages 51-65, January.
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