Export Processing Zones in Central America

Abstract

This paper analyzes Export Processing Zones (EPZs) from a worldwide perspective and draws lessons from the accumulated experience in several countries. It argues that developing countries can take advantage of the opportunities provided by EPZs for the acquisition of superior technology, upgrading of labor and managerial skills, and greater access to foreign markets. The paper then examines the development and economic significance of EPZs and similar export-oriented regimes in Central America. This analysis shows that during the 1990s the economic significance of EPZs and other export-oriented regimes increased rapidly, although not uniformly, throughout Central America. The paper ends with a series of considerations and policy proposals for EPZs development in the region. Among other policies, this paper focuses on the promotion of industry diversification of export-oriented activities, on the development of stronger backward linkages, and on the upgrading of the export-oriented legislation in Central America.

JEL Classification: F14, F15, O19