Export processing zones and the quest for sustainable development: a Southern African perspective

Abstract

This paper discusses why export processing zones (EPZs) provide little prospect for addressing Southern Africa’s economic problems while also threatening not only labour standards but also greater regional cooperation. It describes the “race to the bottom” as governments in the region compete for foreign investment by lowering labour standards, often restricting union rights and offering incentives to foreign firms that are so costly that they greatly limit the net benefits of the new investments to the national or local economy (while providing considerable benefits for foreign investors and shareholders). The paper then examines in more detail the costs and benefits of Namibia’s EPZs which, despite generous concessions and controls on labour unions, produced only 400 new jobs in the first three years compared to the 25,000 anticipated. It also explains how the granting of EPZ status to mining companies and refineries will diminish government revenues, and describes the heavy investment and costly incentives offered to attract a new textile company.