An Evaluation of Karachi Export Processing Zone: A Preliminary Investigation

The literature on EPZs shows that these are a second-best solution compared with generalised countrywide reforms, but that, where countrywide reforms are difficult to implement, they can be a useful weapon in the development arsenal [World Bank (2001)]. EPZs have been instrumental not only in increasing exports but also attracting export-oriented foreign direct investment (FDI). China is a classic example to be mentioned here where the levels of FDI have gone up massively over the last ten years. Added up with exports increase are also the benefits of employment generation, development of backward and forward linkages and strengthening the industrial base. The phenomenon of export-processing zones (EPZs) is a part of broader context of structural changes in global economic development. During the last few decades, there has been a tremendous increase in exports of manufactured goods especially from developing countries. EPZs have emerged as an important channel of export generation, especially of manufactured goods, from most of the developing countries e.g. East Asia, Mexico, Morocco etc. Their significance cannot be undermined because of the location-specific advantages and infrastructure facilities possessed by them.