Export-oriented Activities Research Articles

Export Processing Zones in Central America

AbstractThis paper analyzes Export Processing Zones (EPZs) from a worldwide perspective and drawslessons from the accumulated experience in several countries. It argues that developingcountries can take advantage of the opportunities provided by EPZs for the acquisition ofsuperior technology, upgrading of labor and managerial skills, and greater access to foreignmarkets. The paper then examines the development and economic significance of EPZs andsimilar export-oriented regimes in Central America. This analysis shows that during the 1990sthe economic significance of EPZs and other export-oriented regimes increased rapidly,although not uniformly, throughout Central America. The paper ends with a series ofconsiderations 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, onthe development of stronger backward linkages, and on the upgrading of the export-orientedlegislation in Central America.Keywords: Export-Oriented Regimes, Export Processing Zones, Maquila, Central America,Industrial DevelopmentMauricio Jenkins is a faculty member at INCAE.Gerardo Esquivel is a Development Associate at the Harvard Institute for InternationalDevelopment (HIID) and Macroeconomics Researcher in the Central America Project.Felipe Larrain is the Robert F. Kennedy Visiting Professor of Latin American Studies at theKennedy School of Government, Harvard University and the Director of the Central AmericaProject at HIID.

The Economics of Export Processing Zones Revisited

The accumulation of empirical evidence that outward-oriented developing countries have generally performed better than inward-oriented ones in terms of growth, industrialisation, job creation and other macroeconomic indicators provides an essential lesson for both policy-makers and development economists worldwide. The acknowledged importance of trade and non-traditional exports for development and rapid economic expansion in South-East Asia has inspired many developing countries to encourage export-oriented activities. Various instruments to promote non-traditional exports exist; this article will focus on the so-called export processing zones (EPZs).’ EPZs have long been a controversial issue among economists. The theoretical literature has most often argued that EPZs are welfare-reducing for the host country, but the extraordinary growth performance in, for example, China’s free trade areas, Mauritius’ EPZ and the Macao EPZ has stimulated a new interest and suggests that economic theory may lag behind in explaining the economic growth possibilities connected with EPZs. Some of the existing theoretical approaches, such as the neo-classical, have effectively assumed away the reasons for the EPZs, while others, in turn, have overlooked possible beneficial effects from their establishment. One such important effect may be the curufytic role of EPZs for the host country. In distorted, low-income economies lacking industrial capability, EPZs may initiate export-led industrialisation by bringing a critical mass of knowledge to the country. Furthermore, EPZs may also have a catalytic effect on some of the multinational corporations entering the zones, especially inexperienced mncs. Several of the mncs emanating from developing countries, for example, started their foreign production venture by investing in Ems. (Less)

The Surge of Asian NIC Investment into Indonesia1

Since 1987 a dramatic increase in both domestic and foreign investment in Indonesia, most of it in export-oriented activities, has occurred in response to improvements in a previously unattractive investment climate and in the country's trade regime. Most striking has been the rise in investment by Asia's four ‘newly-industrialising countries’ (NICs): Korea, Taiwan, Hong Kong and Singapore. This paper analyses the factors contributing to this increase and the investment patterns of the four countries. It then focuses on investment in the manufacturing sector, where most of the NIC investments have taken place. The relative importance of each country as a source of investment in individual sectors and industries is examined. The paper concludes that this recent investment surge may yield net social benefits for Indonesia, provided the country continues to adhere to sound macroeconomic and export-promoting policies. 1 The author gratefully acknowledges the valuable comments of H.W. Arndt, Masaaki Horiguchi,...

A Structural Model for Developing Countries' Manufactured Exports

A dynamic structural econometric model is developed to analyze movements in manufactured exports and to capture lags in the adjustment to equilibrium. The model is estimated with pooled cross-section time-series data for a representative sample of fifteen developing countries grouped according to their export market power. The results suggest that prices, domestic productive capacity, and external economic activity are critical determinants of manufactured exports from developing countries. The structural parameter estimates are used to infer the effects of changes in destination country income, distinguishing between the short-run and long-run export volume and export revenue effects. The results indicate that domestic economic policies that promote investment and capacity in export-oriented activities are likely to play a key role in increasing foreign exchange earnings in developing countries, even if growth in external demand is slow.

The Household and Class Formation: Determinants of Residential Location in Ciudad Juaréz

An increasing number of jobs in the Ciudad Juárez-El Paso region is directly attributable to the growth of export-oriented manufacturing activity. These jobs, particularly those in Ciudad Juarez, tend to be at the bottom of the production hierarchy, low-skilled, and impermanent. Sectoral diversification in the regional labor market is being accompanied by homogenization of skills required for available jobs. Analysis of a survey of 1236 households in Ciudad Juárez indicates how they are responding to the changing character of labor demand. The households most directly affected by the industrialization process, those of the maquiladora or assembly-plant work force, arc compared with other types of households in the city. In addition, determinants of income in spatial sectors of the city are analyzed.