Export Processing Zones in Developing Countries: Theory and Empirical Evidence

Abstract

Export Processing Zones (EPZs), variously styled as free port zones, duty-free zones and free economic zones, are not a new phenomenon. The Rotterdam and Hamburg free port zones, for instance, date back to the latter half of the nineteenth century. Currently there are more than four hundred free port zones of differing description in various parts of the world, including the USA and the UK. Although they are a comparatively recent phenomenon in developing countries, they have steadily increased in number from seven at the end of 1970 to more than one hundred by the end of 1984. This chapter reviews the theory relating to EPZs and the available evidence on their benefits and costs to developing countries.