What are EPZs?

Today, there are many types of export processing zones (EPZs) which include free trade zones, special economic zones, bonded warehouses, free ports, customs zones and maquiladoras. The ILO has defined EPZs as "industrial zones with special incentives set up to attract foreign investors, in which imported materials undergo some degree of processing before being re-exported". With developments in information technology, "imported material" would also include "electronic data" today, as well as, call centres located in zones. EPZs have evolved from initial assembly and simple processing activities to include high tech and science parks, finance zones, logistics centres and even tourist resorts. Their physical form now includes not only enclave-type zones but also single-industry zones (such as the jewelry zone in Thailand or the leather zone in Turkey); single-commodity zones (like tea in Zimbabwe); and single-factory (such as the Export Oriented Units in India) or single-company zones (such as in the Dominican Republic). Madagascar, Mauritius and Hainan (China) allow factories anywhere on the respective island to apply for zone status. Port cities like Hong Kong and Singapore have enhanced their strategic trading role by providing special customs regimes for export processing and transhipment. While many public agencies are still establishing zones, there is a distinct trend towards the private development of zones, often by foreign developers. Public zones usually offer better infrastructure than that available in the domestic economy, and private zones generally surpass that in an attempt to attract higher quality investment. As can be seen from the ILO database (pdf, 971k) both the number of EPZs and the number of countries hosting them, have expanded rapidly. While textiles and clothing and electronics were the main industries initially established in EPZs, the product mix today can include almost any sector.