This note focuses on export processingzones as potential, useful tools in export promotion, and,outlines the general features, and objectives of thesezones, highlighting country experiences, and offering policyrecommendations for establishing them. It identifies threemain goals of export processing zones: provision of foreignexchange earnings; job creation, and income generation; and,attracts foreign direct investments, which enhancesknowledge, and technology transfer. While common featuresare generally shared, export zones are differentiated bypublic, or private ownership, or management, and, bydependent qualities of management, facilities, and servicesthey provide, namely, defined as "high-end" or"low-end". Recommendations suggest that exportprocessing zones is one of a number of tools, used tooff-set anti-export bias, in distorted economies. But justlike other export promotion tools, export zones are asecond-best policy choice. Zones can play a dynamic role inthe development of a country, provided they are adequatelymanaged, and integrated within national reform, andliberalization programs. However, zones should not beestablished in liberal, low-protection economies, due to thepotential of lower than expected foreign direct investments,as a result of unattractive laws, and regulations, andbecause they may distort trade instruments, introducingdiscretionary elements in policy framework.
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