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Export Processing Zones: Free Market Islands or Bridges to Structural Transformation?

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  • Andrew Schrank

Abstract

Do export processing zones draw local manufacturers into world markets – and thereby engender broader market reform – by way of a ‘demonstration effect’? The answer is likely (i) to be determined, not in the EPZ, but in the host country's national customs area, and (ii) to vary systematically with the size of the relevant market. While manufacturers from large economies are able to compete in world markets, and are therefore susceptible to the demonstration effect, their counterparts from small economies are unable to do so, and are therefore intractable. Thus, the nature of the EPZ life‐cycle, like the legacy of import‐substituting industrialisation, is in no small measure a function of market size.

Suggested Citation

  • Andrew Schrank, 2001. "Export Processing Zones: Free Market Islands or Bridges to Structural Transformation?," Development Policy Review, Overseas Development Institute, vol. 19(2), pages 223-242, June.
    • Handle: RePEc:bla:devpol:v:19:y:2001:i:2:p:223-242
    DOI: 10.1111/1467-7679.00132
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    Cited by:

    1. Reeg, Caroline, 2017. "Spatial development initiatives – potentials, challenges and policy lessons: with a specific outlook for inclusive agrocorridors in Sub-Sahara Africa," IDOS Studies, German Institute of Development and Sustainability (IDOS), volume 97, number 97, July.
    2. 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.
    3. Benjamin Goldfrank & Andrew Schrank, 2009. "Municipal Neoliberalism and Municipal Socialism: Urban Political Economy in Latin America," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 33(2), pages 443-462, June.
    4. Alexandre Lavissière & Jean-Paul Rodrigue, 2017. "Free ports: towards a network of trade gateways," Journal of Shipping and Trade, Springer, vol. 2(1), pages 1-17, December.
    5. Carol Newman & John Page, 2017. "Industrial clusters: The case for Special Economic Zones in Africa," WIDER Working Paper Series wp-2017-15, World Institute for Development Economic Research (UNU-WIDER).
    6. Rajneesh Narula & James X. Zhan, . "Using special economic zones to facilitate development: policy implications," UNCTAD Transnational Corporations Journal, United Nations Conference on Trade and Development.
    7. Khan, Karim, 2019. "Special Economic Zones (SEZs) and Prospects for the Domestic Economy of Pakistan," MPRA Paper 103337, University Library of Munich, Germany.
    8. Nathaniel Landingin & David Wadley, 2005. "Export processing zones and growth triangle development: the case of the BIMP-EAGA, Southeast Asia," Journal of International Development, John Wiley & Sons, Ltd., vol. 17(1), pages 67-96.
    9. Lotta Moberg, 2018. "Liberalizing Rent-Seeking: How Export Processing Zones Can Save or Sink an Economy," Journal of Private Enterprise, The Association of Private Enterprise Education, vol. 33(Winter 20), pages 61-89.
    10. Acs, Zoltan & Virgill, Nicola, 2010. "Entrepreneurship in Developing Countries," Foundations and Trends(R) in Entrepreneurship, now publishers, vol. 6(1), pages 1-68, February.
    11. 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.
    12. Lotta Moberg & Vlad Tarko, 2021. "Special economic zones and liberalization avalanches," Journal of Entrepreneurship and Public Policy, Emerald Group Publishing Limited, vol. 10(1), pages 120-139, February.
    13. Muge Seda Ates & Gizem Ates & Demet Toktas & Esra Canpolat Gokce, 2023. "The Relationship Imports and Exports in Free Zones Have with Turkiye Foreign Trade and Employment: The Fourier Autoregressive Distributive Lag (ADL) Hidden Cointegration Test," Istanbul Journal of Economics-Istanbul Iktisat Dergisi, Istanbul University, Faculty of Economics, vol. 73(73-1), pages 385-418, June.
    14. Moberg, Lotta, 2015. "The political economy of special economic zones," Journal of Institutional Economics, Cambridge University Press, vol. 11(1), pages 167-190, March.
    15. Carol Newman & John Page, 2017. "Industrial clusters: The case for Special Economic Zones in Africa," WIDER Working Paper Series 015, World Institute for Development Economic Research (UNU-WIDER).
    16. Mohammad Hanif Akhtar, 2003. "An Evaluation of Karachi Export Processing Zone: A Preliminary Investigation," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 42(4), pages 927-940.

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