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Export Processing Zones: Past and Future Role in Trade and Development

Author

Listed:
  • Michael Engman

    (OECD)

  • Osamu Onodera

    (OECD)

  • Enrico Pinali

    (OECD)

Abstract

This paper studies export processing zones (EPZs) which have become increasingly popular as a policy tool for development and export-oriented growth, and can be found in 130 countries around the world. The report consists of four parts. Part I provides a broad overview on the current use of EPZs, including the evolution of EPZ policy, their objectives and how these are achieved, and the incentives commonly offered. It presents case studies from China, India and Russia illustrating new trends and policies. Part II then provides a review of the economic costs and benefits of EPZs with particular focus on their trade and employment implications. Part III presents an analysis of how common EPZ policies relate to trade rules. It reviews the relationship between EPZs and the WTO Agreements such as the WTO Agreement on Subsidies and Countervailing Measures (ASCM), followed by a discussion of how EPZs are commonly treated in RTAs. Part IV concludes. EPZs are a sub-optimal policy from an economic point of view since it benefits the few and distorts resource allocation, but may be useful as a stepping stone to trade liberalisation on a national basis. Governments should consider all available policy options, and conduct a thorough cost/benefit analysis before implementation.

Suggested Citation

  • Michael Engman & Osamu Onodera & Enrico Pinali, 2007. "Export Processing Zones: Past and Future Role in Trade and Development," OECD Trade Policy Papers 53, OECD Publishing.
  • Handle: RePEc:oec:traaab:53-en
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    File URL: http://dx.doi.org/10.1787/035168776831
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    Citations

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    Cited by:

    1. William MILBERG & Deborah WINKLER, 2011. "Economic and social upgrading in global production networks: Problems of theory and measurement," International Labour Review, International Labour Organization, vol. 150(3-4), pages 341-365, December.
    2. Jean-Marc Siroën & Ayçil Yücer, 2014. "Trade Performance of Free Trade Zones," Working Papers DT/2014/09, DIAL (Développement, Institutions et Mondialisation).
    3. Picarelli, Nathalie, 2016. "Who really benefits from export processing zones? Evidence from Nicaraguan municipalities," Labour Economics, Elsevier, vol. 41(C), pages 318-332.
    4. Triyakshana Seshadri & Virgil Storr, 2010. "Knowledge problems associated with creating export zones," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 23(4), pages 347-366, December.
    5. Wojciech Lichota, 2016. "Efektywność finansowa specjalnych stref ekonomicznych w Polsce," Gospodarka Narodowa, Warsaw School of Economics, issue 1, pages 99-130.
    6. repec:eee:riibaf:v:42:y:2017:i:c:p:1150-1163 is not listed on IDEAS
    7. Creskoff, Stephen & Walkenhorst, Peter, 2009. "Implications of WTO disciplines for special economic zones in developing countries," Policy Research Working Paper Series 4892, The World Bank.
    8. repec:wsi:jicepx:v:06:y:2015:i:01:n:s1793993315500064 is not listed on IDEAS
    9. repec:bla:worlde:v:40:y:2017:i:5:p:1012-1038 is not listed on IDEAS
    10. Tantri, Malini L., 2014. "Promises and paradoxes of SEZs expansion in India," Working Papers 331, Institute for Social and Economic Change, Bangalore.
    11. Malini L. Tantri, 2012. "Did the metamorphosis from Export Processing Zones to Special Economic Zones improve the efficiency of trade enclaves in India?," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 15(4), pages 321-337, December.
    12. Ricardo Hausmann & Juan Obach & Miguel Angel Santos, 2016. "Special Economic Zones in Panama: Technology Spillovers from a Labor Market Perspective," CID Working Papers 326, Center for International Development at Harvard University.
    13. Brooks, Douglas H. & Ferrarini, Benno, 2014. "Vertical gravity," Journal of Asian Economics, Elsevier, vol. 31, pages 1-9.
    14. Konstantinos J. Hazakis, 2014. "The rationale of special economic zones (SEZs): An Institutional approach," Regional Science Policy & Practice, Wiley Blackwell, vol. 6(1), pages 85-101, March.
    15. Przemyslaw Kowalski, 2008. "China and India - A Tale of Two Trade Integration Approaches," Trade Working Papers 22170, East Asian Bureau of Economic Research.
    16. Hausmann, Ricardo & Obach, Juan & Santos, Miquel Angel, 2016. "Special Economic Zones in Panama: A Critical Assessment," Working Paper Series rwp16-044, Harvard University, John F. Kennedy School of Government.
    17. Sargent, John & Matthews, Linda, 2009. "China versus Mexico in the Global EPZ Industry: Maquiladoras, FDI Quality, and Plant Mortality," World Development, Elsevier, vol. 37(6), pages 1069-1082, June.
    18. repec:wsi:ceprxx:v:03:y:2014:i:02:n:s1793969014500125 is not listed on IDEAS
    19. Ayçıl Yücer & Jean-Marc Siroën, 2017. "Trade Performance of Export Processing Zones," The World Economy, Wiley Blackwell, vol. 40(5), pages 1012-1038, May.

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