Export processing zones as an element of export‐oriented and regional industrial development

Abstract

Establishing export processing zones (EPZs) is a popular method of creating isolated islands of free trade which provide the export manufacturer with freedom from the cost‐increasing measures implemented to protect the domestic market. In South Africa the interest in using this concept has remained alive, especially because the EPZ has the additional advantage of being used as an instrument of regional development. After account has been taken in the paper of the economic rationale of the EPZ and of the apparent conditions for the successful operation of an EPZ, as deduced from the experience of countries that have made use of this development instrument, it is concluded that the economic feasibility of establishing conventional EPZs in South Africa is doubtful. A flexible approach, making use of the EPZ approach and of the system of duty drawbacks and rebates, could form the nucleus of a cost‐efficient way of providing export manufacturers with the advantages of a free trade situation.

Notes

Professor of Economics, University of Stellenbosch.