Chapter

Africa, Industrial Policy, and Export Processing Zones: Lessons from Asia<sup>*</sup><sup>1</sup>

Howard Stein

in Good Growth and Governance in Africa

Published in print December 2011 | ISBN: 9780199698561
Published online May 2012 | e-ISBN: 9780191738142 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780199698561.003.0011

Series: Initiative for Policy Dialogue

Africa, Industrial Policy, and Export Processing Zones: Lessons from Asia*1

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The contrast between export processing zones and Asia and Sub-Saharan Africa is striking. In a number of Asian countries, EPZs and related zones have generated millions of jobs, significant foreign exchange, backward, forward and demand linkages, self-generating capital accumulation, training and technological spillovers, and significant local spin-offs and co-ownership opportunities. Most zones in Africa have remained rather small, with few linkages to the local economy and small foreign-exchange earnings. The paper investigates the reasons for this. The main problem is that many zones in SSA have been driven by aid agencies with promises of special access to foreign markets which have proven to be quite limited particularly after the expiration of the Multi Fibre Arrangement in January 2005. In addition, the vision has been driven by the rather faulty theoretical notions in World Bank policy papers and elsewhere, that EPZs are simply second-best solutions to the total liberalization of economies. In contrast, in many of the successful export zones in Asian countries, EPZs have been part of a broader industrial policy where zones are not an end in themselves but a component of the broader strategy to transforming institutions to improve developmental competitiveness and industrialize the country.

Keywords: export processing zones; World Bank; industrial policy; Sub-Saharan Africa; East Asia; neoliberalism; institutional transformation; developmental competitiveness

Chapter.  10730 words. 

Subjects: Economic Development and Growth

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