Export Processing Zones and Economic Development in Asia: A Review and Reassessment of a Means of Promoting Growth and Jobs

. Nearly every developing country in Asia has established export processing (EPZs) and free trade zones (FTZs) to promote economic development. EPZs and FTZs have created new employment, generated foreign exchange, expanded national revenues and increased export flows. But not all have thus benefited. Adverse effects of these industrial enclaves, not offset by national benefits, are varied. The zones mostly have high construction and maintenance costs, primarily employ low‐wage, unskilled female labor, offer an unstable employment base, generate little domestic added value, develop few labor or managerial skills, transfer little modern technology or know‐how and have weak links to domestic manufacturers. Large EPZs may promote undesirable in‐migration from rural areas, produce more dependence on foreign‐owned firms that tend to move or cut back production when wages, costs or international trends change. Policy options to prevent or mitigate adverse effects are presented.