The Political Economy of Export Processing Zones (EPZs) in Developing Countries: Implications for the Arandis Initiative in Namibia

Abstract:     
In attempts to attract foreign investment many developing countries find export processing zones (EPZs) appealing. Namibia, for example, sought to establish an EPZ around the uranium mining town of Arandis. This paper is a critical response to that initiative. It reviews a number of EPZ schemes worldwide and finds their performance abysmal (far less than stellar). In particular the incentives that Namibia offers to motivate EPZs are not unique by international standards, such that the opportunity cost of attracting foreign firms via the EPZ scheme outweighs its benefit. The paper concludes that the impact of EPZ enclaves to domestic economic growth are likely to remain limited.

Keywords: export processing zones in developing countries, EPZs and Namibia Africa, fiscal incentives for EPZs

JEL Classifications: D24; L1; L16; L52; L6; L7; L8; P4

Accepted Paper Series