The political economy of export processing zones (EPZs) in developing countries

The ideology and praxis of EPZs are reviewed, followed by an analysis of the economics of EPZs. Namibia's EPZ incentives are analysed in the context of successful EPZs elsewhere in the world. Although the Arandis EPZ in Namibia has some credible advantages, its fiscal incentives are not really special by international standards. The zone's incentives appear suitable for non-mineral processing industries, while the country's comparative advantages are in minerals. The conclusion is that EPZs are not of themselves engines of economic development, and must not be sold as such. Traditional investment strategies, eg R&D and joint ventures, offer better opportunities for development at about the same cost as EPZs.