EPZs: A rapid expansion

The International Labour Organisation (ILO) has adopted a broad definition of what may constitute an EPZ, namely ‘industrial zones with special incentives set up to attract foreign investors, in which imported materials undergo some degree of processing before being (re-)exported again’. Under this definition, EPZs can include free trade zones, special economic zones and maquiladoras in Mexico. ‘Special incentives’ take a range of forms, but typically include tax breaks, duty free imports and exports, and provision of infrastructure. EPZs tend to be located in regions where workers are plentiful and wages are low. In the last 10 years there has been a rapid expansion in the number of countries with EPZs, in the overall number of EPZs, and in the number of workers employed there (see table).

Table 1. Estimates of the development of export processing zones

	1975	1986	1995	1997	2002
No. of countries with EPZs	25	47	73	93	116
No. of EPZs	79	176	500	845	3,000
Employment (millions)	n.a.	n.a.	n.a.	22.5	43
- of which China	n.a.	n.a.	n.a.	18	30
- other countries for which figures available	0.8	1.9	n.a.	4.5	13

Source: ILO Governing Body Committee on Employment and Social Policy agenda paper, March 2003. Data available for 108 countries.Sep 28, 2003 – Jesper Nilsson