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A 01 @ 01 ? 01 ? 01 ? 12 ? 12? ?? 12 ? 12 > 12 = 23 = 23? = 23 = 23 < 23 ; 34 ; 34? ; 34 + 34 + 34 + 45?     45 ? ? 45 ? 56 ?56  56 ? 57 ?  ? 67?    67  68  78  78#89   8:   9;   :J   <J  II  I60  56x  <56~  56??  56  56  56   ?56    56  ?  67  ?  67 ?  67? ? 676767??67?787878?7878?78?8989?898989 ?89 9: ?9:? 9: 9: ?9: :: :; :;? :; ?:; ?:; ;< ;<? ;< ;<? ;= <=? ?<= <= ?<>  =>   => ? =?  >??  >?  >? ? ?@? ? ?@ ?A?@A?@B?AC  BC  CD  DRQRQR?QR??QRQRQQQQQR?QRRS?RSST?STh????????????????????????  ?    ?       ?  ?          ?  ?            ?  ?          ?      ?  ?  ??.Qy-iloframe.tif* `(CG TimesScalable($     v e!  _2X_9 XXXX~2X X2X_9 =    1    XX~2See_SALC_ԀDoc._SALC_/XIV/MT/4,AnnexII,p.1,recommendation1.(a).#20; J#) `,CG Times )Scalable  e!  _/XXXXԀ  2  /0; X/X20;  /0; 20;EconomicandSocialEffectsofMultinationalenterprisesinexportprocessingzones,ILO/_UNCTC_,  Geneva,1988,p.4.#20; #2X_9 X 20;4XX X2X_9<6X9`(*Courier 10cpiTTT) e!  _ =    3    XXIdem,p.28.X~2X dTable_A dTable_B  =$    18    _XXIncentivesforLocalInvestors,ZimbabweInvestment_Centre_Ԁ(August1995),p.14.#X~2XW#((3$ e!      0   =$    38    _XXOECDDoc.COM/_DEELSA_/TD(95)7,p.44.#X~2XT#&0 d d e!  _ =    10    XXArt.4,LesothoNationalDevelopmentCorporationAct1967#X~2Xo# W_ =    11    XX_LNDC_ԀAnnualReport#X~2XT#XX~2Ԁ1993/94,_LNDC_,Maseru(Lesotho),p.1.#X~2X# e!  _Ԁ    22  XXArticle42,_Labour_ԀAct,1992.#X~2XX# =$    20    _XXArt.14(5)_NEPZ_ԀAct.#X~2XT#  e!  _2X_9 XXXԀ    13  20;  X2X_9 20;_BDC_ԀAnnualReport1994,BotswanaDevelopmentCorporation,Gaborone(Botswana),p.15and3,  respectively.#20; #2X_9 X 20; e!  _Ԁ =    17    XXGovernmentGazette,21April1995,GeneralNotice274of1995. ) e!  _ =    25    XX20;  20;_MEPZ_ԀAct,1995,Section7.#20; #  =$    37    _XXSeee.g.,Tradeand_Labour_ԀStandards,OECDDoc.COM/_DEELSA_/TD(95)7#X~2XT#XX~2; Annual  InvestmentIntentionsSurvey,CorporateLocation,September/October1995,p.12.#X~2X%# e!  _Ԁ2X_9 XXXX~2X X2X_9 =    26    XX~2Idem#20; O#.  =$    34    _XXIdem,p.3.ThesamplemaynotbeindicativeofthosefirmswhoaprioriruleAfricaoutoftheir  globalinvestmentstrategies.However,itcomprisesfirmswhoarewellinformedaboutinvestingintheregionandwhoseopinionsshouldgiveinsightintowhatisdeterringinvestmentinAfricaforallthoseseriouslyconsideringsuchanoption.#X~2XT# b =$    35    _XX_Biggs_Ԁetal.(1993).Africacancompete!,WorldBankDiscussionPapers,AfricaTechnical  DepartmentSeries,WorldBank,WashingtonDC,pp.5054.#X~2XT#  =$    36    _XXTheseinterviewswereconductedwithinvestorsinthetextilesandgarments(3),electronics(1),  metal(1),andplasticsindustries(1)andwithofficialsofthe_LNDC_Ԁand_BDC_ԀduringOctoberandNovemberinLesothoandBotswana.#X~2XT#  e!  _/XXXX    23  /0; X/X# /0;+#Article21,para.1(e),ConstitutionofNamibia.#X~2Xs# =_XX  =    40    Forinstance,AMCinHarare,see_Biggs_Ԁetal.(1993),atn.35,p.44.Thatthequotasystemaccounted  forasignificantincentiveto_FDI_ԀinSouthernAfricacanalsobegaugedbytheallegationsthatChineseinvestmentintoLesothohasbeenusedfortranshipmentofChinesemadegarmentstotheUSmarket,(idem,p.52).#X~2X# _ =    41    XXForinstance,inadditiontothoserequiredtosetupthe_EPZ_Ԁfacilities,investmentprojectsinthe  planned_EPZ_ԀinWalvisBayincludeamarbleprocessingplant,anoilrefinery,aregionalairline,andaclothingfactory.Onlythislatteroneisofafootloosekind,see_Lucienne_Ԁ_Fild_, Meetingtodrumupsupportfor @ _EPZ_,TheNamibian,May1995.  =$    42    _XXTheDeterminantsofForeignDirectInvestment,_UNCTC_,UnitedNations,NewYork(1992),p.60.#X~2XW#  =$    5    _Seee.g.,XX_UNCTAD_,ExportprocessingZonesin_Subsaharan_ԀAfrica,Part1,UNDoc  _UNCTAD_/_ECDC_/225(PartI),pp.14;_UNCTAD_#X~2X]#XX~2, ExportProcessingZones:RoleofForeignDirect  InvestmentandDevelopmentalImpact,UNDoc.TD/B/_WG_.1/6,Geneva,1993#X~2X#. _"  _ XXUKUS.,  @TTFCommonfeaturesof_EPZ_Ԁdevelopmentworldwide    Typicalactivities Foreigninvested_EPZ_Ԁfirmsessentiallyengageinsimpleassemblingoperationsandthe  mostsophisticatedfunctionssuchasresearchanddevelopment,designoradvancedmanufacturingprocessesareretainedintheparentcompaniesathome.Asaresultthepackageofassetsthatisintroducedinthehost_EPZ_Ԁisgenerally"poor".Since_EPZs_'exportedproductsaretypicallyassembledwithimportedinputs,thenetforeignexchangebenefitstothehosteconomyhavebeenmuchsmallerthanthevalueofgross_EPZ_Ԁexports.Thetechnologicalcontentof_EPZ_Ԁproductionislimited,andgiventhe"enclave"natureofmost_EPZs_,backwardlinkageswithlocalsuppliersarealsolimited.Problemsconcerningthevolatilityoftheoperationsofforeigninvestorshavealsocharacterizedmost_EPZs_. Success Wheresuccessful,however,_EPZs_Ԁhavecontributedtoforeignexchangeearningsandquick   generationofemployment.Moreimportant,_EPZ_Ԁschemeshaveprovidedsomeinitialconditionsforintegrationintheglobaleconomy,inAsiainparticular.Theoutstandingeconomicsuccessoftheseeconomiesisthemostvisiblephenomenonofthe1990s.Underlyingthissuccess,however,isasetoffactorsthataccountedforthecapacityoflocalemployerstoskilfullygainfromtheintroductionofforeignfirmsinthe_EPZs_..Withinthisframework,demonstrationeffectsandemulationbylocalAsianemployershavebeenthemainavenueforthetransferofknowledgeandorganizationalskillsfromforeign_EPZ_Ԁfirms.Anactiverolehasalsobeenplayedbygovernmentsinsupportingthisprocess. Failure 󀄀Itistoberecalledthatmanyzonesneverliveduptotheexpectationsoftheircreators,orwere  outrightfailures.Anumberofclassicalfactorswhichexplainthesefailurescanbeidentified.Theseinclude:poorplanning;"inconvenient"location;insufficientattentiontothebasicinfrastructuresuchasroads,airports,telecommunicationsorelectricitysupply;lackofeffectivepromotionandmismanagement.US.,UK.,MVX*OLE* =$    24    _XXTheNamibian,28February1996.#X~2XT#WPC:  pXXXX,,,,519art :DD#?@?#?#?(@@ )| )|   F226ffffffֿp= ף(\?TQ  +  )|  )|  )|   )|  )|  )|?  )|  )|   ) |   ) |   ) |   ) |   ) |  )|  )|  )|  )|  )|?  )|  )|  )|  )|  )| 4oCLLA"Arial Regular )|  )|CA"Arial Regular )|  )|CA"Arial Regular )|  )|CeeA"Arial Regular )|  )|CeeA"Arial Regular )|  )|CeeA"Arial Regular )|  )|CeeA"Arial Regular )|  )|CA"Arial Regular )|  )|C  A"Arial Regular )|  )|C eeA"Arial Regular ) |  ) | C A"Arial Regular ) |  ) | C A"Arial Regular ) |   ) | C A"Arial Regular ) |   ) |     // :Table 5.1 Ranking of Constraints to Future ActivityAverage score (1)Legendd Q@Problems with business services%Problems related to market conditionsCost and/or quality of labour!Problems related to raw materialsProblems with transportOther regulationsImport/export regulationsProblems with financingRemittability of profit/capitalForeign exchange regulations"Problems with basic infrastructure Political and policy uncertainty @333333@ @ @@@@@ @`@ ) D ;DDmOA"Arial RegularO @    Table5.1RankingofConstraintstoFutureActivity  <, 2dOA"Arial RegularO @    Averagescore(1)13 =O  >O O  ?O O 8 13 @ w w  A7 B_) C}O  D`O  EBO  F%O  GO  HO g  IO I  JO +  K O   Ls O  MU O )13 N * 13 O  13 P +13 Q+13 R hOA"Arial RegularOlll @    2.213 S m* m13 T  mm13 Um+13 Vuurr+13 WeJOA"Arial RegularOlll @    2.413 X O* ooO13 Y  OO13 ZOo+13 [UU+13 \-OA"Arial RegularOlll @    2.513 ] 1* QQ113 ^  1113 _1Q+13 `77+13 aOA"Arial RegularOlll @    2.513 b * 4_4@13 c u @@u13 d@_4_@u+13 e@pp@+13 fPOA"Arial RegularOlll @    2.613 g * _@13 h X @@X13 i@__w@X+13 j@SS@+13 kPcOA"Arial RegularOlll @    2.613 l * 13 m : :13 nZ:+13 o5g5g+13 pEWOA"Arial RegularOlll @    2.713 q *   13 r    13 s  <  +13 t g g  +13 u( W OA"Arial RegularOlll @    2.713 v *   13 w   13 x    +13 y    +13 z { OA"Arial RegularOlll @    313 { *   13 |   13 }    +13 ~    +13  ] OA"Arial RegularOlll @    313  b * D %b 13  b %b % 13 %b D D % +13 %  h %h +13 5 @ OA"Arial RegularOlll @    3.213  D * d 7d D 13  D D  13 D 7d 7  +13   J J +13 ( " OA"Arial RegularOlll @    3.53   3 E7OA"Arial RegularO;;; @    Problemswithbusinessservices3 3 DOA"Arial RegularO;;; @    Problemsrelatedtomarketconditions3 3  OA"Arial RegularO;;; @    Costand/orqualityoflabour3 3 uOA"Arial RegularO;;; @    Problemsrelatedtorawmaterials3 3 XOA"Arial RegularO;;; @    Problemswithtransport3 xx3 1:OA"Arial RegularO;;; @    Otherregulations3 [[3 OA"Arial RegularO;;; @    Import/exportregulations3 ==3 hOA"Arial RegularO;;; @    Problemswithfinancing3   3 :J OA"Arial RegularO;;; @    Remittabilityofprofit/capital3   3  - OA"Arial RegularO;;; @    Foreignexchangeregulations3   3   OA"Arial RegularO;;; @    Problemswithbasicinfrastructure3   3   OA"Arial RegularO;;; @    Politicalandpolicyuncertainty3 J3  OA"Arial RegularO @    03   J3  9 OA"Arial RegularO @    13 77J3  a OA"Arial RegularO @    23 __J3 4 OA"Arial RegularO @    33 J3 \ OA"Arial RegularO @    4  WPWin 6.0/OLE 1.0 Prefix Information MarkerWPDraw30.Chartࡱ; "  !$%&'()*+,-./0123456789:;<=>?@Root Entrya.@pNOOle 9WPG20<CompObjZ)F! WPWin61[1]ࡱ a.@pWP Draw 3.0 Chart Embed SourceWPDraw30.Chartࡱ; U]ࡱ; WPC:  pXXXX,,,,519art :DD#?@?#?#?(@@ )| )|   F226ffffffֿp= ף(\?TQ  +  )|  )|  )|   )|  )|  )|?  )|  )|   ) |   ) |   ) |   ) |   ) |  )|  )|  )|  )|  )|?  )|  )|  )|  )|  )| 4oCLLA"Arial Regular )|  )|CA"Arial Regular )|  )|CA"Arial Regular )|  )|CeeA"Arial Regular )|  )|CeeA"Arial Regular )|  )|CeeA"Arial Regular )|  )|CeeA"Arial Regular )|  )|CA"Arial Regular )|  )|C  A"Arial Regular )|  )|C eeA"Arial Regular ) |  ) | C A"Arial Regular ) |  ) | C A"Arial Regular ) |   ) | C A"Arial Regular ) |   ) |     // :Table 5.1 Ranking of Constraints to Future ActivityAverage score (1)Legendd Q@Problems with business services%Problems related to market conditionsCost and/or quality of labour!Problems related to raw materialsProblems with transportOther regulationsImport/export regulationsProblems with financingRemittability of profit/capitalForeign exchange regulations"Problems with basic infrastructure Political and policy uncertainty @333333@ @ @@@@@ @`@ ) D ;DDmOA"Arial RegularO @    Table5.1RankingofConstraintstoFutureActivity  <, 2dOA"Arial RegularO @    Averagescore(1)13 =O  >O O  ?O O 8 13 @ w w  A7 B_) C}O  D`O  EBO  F%O  GO  HO g  IO I  JO +  K O   Ls O  MU O )13 N * 13 O  13 P +13 Q+13 R hOA"Arial RegularOlll @    2.213 S m* m13 T  mm13 Um+13 Vuurr+13 WeJOA"Arial RegularOlll @    2.413 X O* ooO13 Y  OO13 ZOo+13 [UU+13 \-OA"Arial RegularOlll @    2.513 ] 1* QQ113 ^  1113 _1Q+13 `77+13 aOA"Arial RegularOlll @    2.513 b * 4_4@13 c u @@u13 d@_4_@u+13 e@pp@+13 fPOA"Arial RegularOlll @    2.613 g * _@13 h X @@X13 i@__w@X+13 j@SS@+13 kPcOA"Arial RegularOlll @    2.613 l * 13 m : :13 nZ:+13 o5g5g+13 pEWOA"Arial RegularOlll @    2.713 q *   13 r    13 s  <  +13 t g g  +13 u( W OA"Arial RegularOlll @    2.713 v *   13 w   13 x    +13 y    +13 z { OA"Arial RegularOlll @    313 { *   13 |   13 }    +13 ~    +13  ] OA"Arial RegularOlll @    313  b * D %b 13  b %b % 13 %b D D % +13 %  h %h +13 5 @ OA"Arial RegularOlll @    3.213  D * d 7d D 13  D D  13 D 7d 7  +13   J J +13 ( " OA"Arial RegularOlll @    3.53   3 E7OA"Arial RegularO;;; @    Problemswithbusinessservices3 3 DOA"Arial RegularO;;; @    Problemsrelatedtomarketconditions3 3  OA"Arial RegularO;;; @    Costand/orqualityoflabour3 3 uOA"Arial RegularO;;; @    Problemsrelatedtorawmaterials3 3 XOA"Arial RegularO;;; @    Problemswithtransport3 xx3 1:OA"Arial RegularO;;; @    Otherregulations3 [[3 OA"Arial RegularO;;; @    Import/exportregulations3 ==3 hOA"Arial RegularO;;; @    Problemswithfinancing3   3 :J OA"Arial RegularO;;; @    Remittabilityofprofit/capital3   3  - OA"Arial RegularO;;; @    Foreignexchangeregulations3   3   OA"Arial RegularO;;; @    Problemswithbasicinfrastructure3   3   OA"Arial RegularO;;; @    Politicalandpolicyuncertainty3 J3  OA"Arial RegularO @    03   J3  9 OA"Arial RegularO @    13 77J3  a OA"Arial RegularO @    23 __J3 4 OA"Arial RegularO @    33 J3 \ OA"Arial RegularO @    4BOlePartOlePres000#;1$;  ^  $1  ^&Arial3-- .  &Arial-&Arial-"System--^2 :Table 5.1 Ranking of Constraints to Future Activity            w- -&Arial-- .  --!2 +Average score (1)+---$  << ---%  << -- !0--% 00  ---$< 0c<---%< 0c<-- %< 0-- %#<T T0-- %d< 0--- !* !& !" ! ! ! ! ! !  ! ! ! !---- ! ! ! !  ! ! ! ! ! ! ! ! !---- ! ! ! ! ! ! ! ! ! ! ! ! !---- ! ! ! ! ! ! ! ! ! ! ! ! !---- ! ! ! ! ! ! ! ! ! ! ! ! !---- ! ! ! ! ! ! ! ! ! ! ! ! ! !---- ! ! ! ! ! ! ! ! ! ! ! ! !---- ! ! ! ! ! ! ! ! ! ! ! ! !{---- ! ! ! ! ! ! ! !} !y !u !q !m !i---- ! ! ! !{ !w !s !o !k !g !c !_ ![ !W---- !u !q !m !i !e !a !] !Y !U !Q !M !I !E---- $JG-- -%JG-- ! - -%!GG!!--- $GJJG!G-- -%GJJG!G-- !G--%G"GYY"G"-&Arial- -  .  -- 2 I2.2V--- $WT-- -%WT-- !- -%TT--- $TWW TT-- -%TWW TT-- !T--%TTeeT--  .  -- 2 V2.4 c--- $][-- -%][-- !- -%[[--- $[]][[-- -%[]][[-- ![--%[[ll[--  .  -- 2 \2.5i--- $][-- -%][-- !- -%[[--- $[]][[-- -%[]][[-- ![--%[[ll[--  .  -- 2 \2.5i--- $da-- -%da-- !- -%aa--- $addaa-- -%addaa-- !a--%aarra--  .  -- 2 c2.6p--- $da-- -%da-- !- -%aa--- $addaa-- -%addaa-- !a--%aarra--  .  -- 2 c2.6p--- $jh-- -%jh-- !- -%hh--- $hjjhh-- -%hjjhh-- !h--%hhyyh--  .  -- 2 i2.7v--- $jh-- -%jh-- ! - -%hh--- $hjjhh-- -%hjjhh-- !h--%hhyyh--  .  -- 2 i2.7v--- $~{-- -%~{-- ! - -%{{--- ${~~{{-- -%{~~{{-- ! {--%{{{--  .  -- 2 }3--- $ro~o{rr-- -%ro~o{rr-- ! r- -%~r{r{~~--- ${r~o~|{~{r-- -%{r~o~|{~{r-- ! q{--%{{qq{--  .  -- 2 |}3|--- $_]]__-- -%_]]__-- !_- -%l__ll--- $_]jl_-- -%_]jl_-- !_--%l__ll--  .  -- 2 j3.2j--- $MKKMM-- -%MKKMM-- !M- -%ZMMZZ--- $MKWZM-- -%MKWZM-- !M--%ZMMZZ--  .  -- 2 X3.5X--33-&Arial- -  .  -- 62 7 Problems with business services7--!!--  .  -- ?2 $ %Problems related to market conditions$----  .  -- 32 1Cost and/or quality of labour----  .  -- 92 !Problems related to raw materials----  .  -- *2 BProblems with transport----  .  -- !2 YOther regulations----  .  -- -2 =Import/export regulations----  .  -- *2 AProblems with financing----  .  -- 62 3Remittability of profit/capital----  .  -- 12 ,Foreign exchange regulations--~~--  .  -- :2 "Problems with basic infrastructure--ll--  .  -- 72 o* Political and policy uncertaintyo--<C--&Arial-- .  -- 2 P0P--<C-- .  -- 2 P1P--<#C#-- .  -- 2 P 2P&--<dCd-- .  -- 2 P`3Pf--<C-- .  -- 2 P4P-88888888YK4SXб088Yࡱ METAFILEPICT1;1$  ^  $1  ^&Arial3-- .  &Arial-&Arial-"System--^2 :Table 5.1 Ranking of Constraints to Future Activity            w- -&Arial-- .  --!2 +Average score (1)+---$  << ---%  << -- !0--% 00  ---$< 0c<---%< 0c<-- %< 0-- %#<T T0-- %d< 0--- !* !& !" ! ! ! ! ! !  ! ! ! !---- ! ! ! !  ! ! ! ! ! ! ! ! !---- ! ! ! ! ! ! ! ! ! ! ! ! !---- ! ! ! ! ! ! ! ! ! ! ! ! !---- ! ! ! ! ! ! ! ! ! ! ! ! !---- ! ! ! ! ! ! ! ! ! ! ! ! ! !---- ! ! ! ! ! ! ! ! ! ! ! ! !---- ! ! ! ! ! ! ! ! ! ! ! ! !{---- ! ! ! ! ! ! ! !} !y !u !q !m !i---- ! ! ! !{ !w !s !o !k !g !c !_ ![ !W---- !u !q !m !i !e !a !] !Y !U !Q !M !I !E---- $JG-- -%JG-- ! - -%!GG!!--- $GJJG!G-- -%GJJG!G-- !G--%G"GYY"G"-&Arial- -  .  -- 2 I2.2V--- $WT-- -%WT-- !- -%TT--- $TWW TT-- -%TWW TT-- !T--%TTeeT--  .  -- 2 V2.4 c--- $][-- -%][-- !- -%[[--- $[]][[-- -%[]][[-- ![--%[[ll[--  .  -- 2 \2.5i--- $][-- -%][-- !- -%[[--- $[]][[-- -%[]][[-- ![--%[[ll[--  .  -- 2 \2.5i--- $da-- -%da-- !- -%aa--- $addaa-- -%addaa-- !a--%aarra--  .  -- 2 c2.6p--- $da-- -%da-- !- -%aa--- $addaa-- -%addaa-- !a--%aarra--  .  -- 2 c2.6p--- $jh-- -%jh-- !- -%hh--- $hjjhh-- -%hjjhh-- !h--%hhyyh--  .  -- 2 i2.7v--- $jh-- -%jh-- ! - -%hh--- $hjjhh-- -%hjjhh-- !h--%hhyyh--  .  -- 2 i2.7v--- $~{-- -%~{-- ! - -%{{--- ${~~{{-- -%{~~{{-- ! {--%{{{--  .  -- 2 }3--- $ro~o{rr-- -%ro~o{rr-- ! r- -%~r{r{~~--- ${r~o~|{~{r-- -%{r~o~|{~{r-- ! q{--%{{qq{--  .  -- 2 |}3|--- $_]]__-- -%_]]__-- !_- -%l__ll--- $_]jl_-- -%_]jl_-- !_--%l__ll--  .  -- 2 j3.2j--- $MKKMM-- -%MKKMM-- !M- -%ZMMZZ--- $MKWZM-- -%MKWZM-- !M--%ZMMZZ--  .  -- 2 X3.5X--33-&Arial- -  .  -- 62 7 Problems with business services7--!!--  .  -- ?2 $ %Problems related to market conditions$----  .  -- 32 1Cost and/or quality of labour----  .  -- 92 !Problems related to raw materials----  .  -- *2 BProblems with transport----  .  -- !2 YOther regulations----  .  -- -2 =Import/export regulations----  .  -- *2 AProblems with financing----  .  -- 62 3Remittability of profit/capital----  .  -- 12 ,Foreign exchange regulations--~~--  .  -- :2 "Problems with basic infrastructure--ll--  .  -- 72 o* Political and policy uncertaintyo--<C--&Arial-- .  -- 2 P0P--<C-- .  -- 2 P1P--<#C#-- .  -- 2 P 2P&--<dCd-- .  -- 2 P`3Pf--<C-- .  -- 2 P4P-88888888YK4SXб088Y  *#  _  (1)Intervieweeswereaskedtorankeachpotentialsourceofinterestona1to5scalewitha<1>meaning noobstacleanda<5>meaning veryseriousobstacle.XXSource:_Economisti_Ԁ_Associati_Ԁ(1995),EasternAfricaSurveyofForeignInvestors:SummaryofMain  Findings,Bologna,Italy.#X~2X# yfy _  XX@LLRestrictionsonFreedomofAssociationandCollective@@K..Bargainingin_EPZs_    X   Examplesofformerorexistingobstaclestoestablishingandjoiningtradeunionsandengagingincollectivebargainingin HH _EPZs_Ԁandexportorientedenterprisesoperatingundersimilarregimes:   Bangladesh 0  0Section11AoftheBangladesh_EPZ_ԀAuthorityAct(1980)prohibitsworkersfromformingand << joiningtradeunions.   China 0 X 0XX0Legalrestrictionsontherighttoorganizeindependentunionsoutsidetheofficialstructuresof (( theAllChineFederationofTradeUnions.   DominicanRepublic 0  Refusalofcompetentauthoritytoregisterunionsin_EPZs_ԀpriortoenactmentofNew_Labour_   Code(17June1992)whichnowguaranteestradeunionsrights(Section390)andcollectivebargainingin_EPZs_Ԁ(Sections103and281).Continuedresistanceofanumberofemployerstoestablishmentofunionsinkeepingwiththelaw.   Fiji 0 X 0XX0Wagesofworkersingarmentfactoriesandotherenterprisesin_EPZs_Ԁsetunilaterallyby H H  employersratherthanthroughcollectivebargaining.Certainemployerscontinuetoopposetheformationtounions.   X      `     h      p   Malaysia 0 X 0XX0ThegrantingofpioneerstatustocertainexportorientedindustriesunderSection15ofthe   IndustrialRelationsActresultsinafiveyearlimitinnegotiationoftermsandconditionswithrespecttoworkingtime,paidvacationandsickleave.   Pakistan 0 X 0XX0Section25ofthe_EPZ_ԀAuthorityOrdinance(1980)exemptsallzonesfromscopeofIndustrial hh RelationsOrdinance.Section4ofthe_EPZ_Ԁ(ControlofEmployment)Rules(1982)prohibitsallformsofindustrialaction.   Korea(Rep.of) 0  0Strikesnotlegalin_EPZs_Ԁwhichareconsideredtobeofpublicinterest.  (b(ElSalvador,Honduras,  Guatemala,CostaRica     ,,! Governmentbacked,employerpromoted _Solidarist_ԀAssociationsactivelyencouragedasalternativetoindependenttradeunions. " (bbb( X      `     h      p    "  X ElSalvador 0  0Employersin_EPZs_Ԁdonothiremembersofunions.$  Turkey 0 X 0XX0Legislationgoverningstrikes,lockoutsandconciliationprocedureswaivedfor10years ``& followingstartofoperationsinzones.DisputessubmittedtoSupremeArbitrationCommitteeduringthatperiod.   SriLanka 0  0StrikesinexportindustriesmaybeprohibitedundertheEmergency(MiscellaneousProvisions * andPowers)RegulationNo.1(1989)andseveresanctionsmaybeimposedagainstthoseincitingstrikeactionundertheEmergency(MaintenanceofExports)RegulationsNo.1(1992).   Philippines 0  0Certainlocalgovernmentauthoritieshavedeclared_EPZs_Ԁintheirareastobe strikefree . zones.WhileArticle263(g)and(I)ofthe_Labour_ԀCodehasbeenamendedtoexcludespecificmentionof exportorientedindustriesand_EPZs_,theprovisionimposingcompulsoryarbitrationforsettlementof_labour_Ԁdisputeslikelyto,orhavingcausedastrikeoralockoutinan industryindispensabletothenationalinterest,stillposesaproblem.ASenateBill(No.1757)tolimitsuchactiontoindustriesperformingessentialservicesistobediscussed.   Togo 0 X 0XX0Legislationforthesettingupof_EPZs_Ԁ(Act.No.9814of18.09.90)containsnoprovisions !!5 indicatingwhether_labour_Ԁrelationsinzonesaregovernedbythe_Labour_ԀCode.  Otherhiddenobstaclestotheexerciseoftradeunionrightsthathavebeenreportedinanumberofcountriesare:unjustifieddismissals,suspensions,arrestsofunionsleaders,blacklisting,promotionofunionofficialsonconditionthattheyrelinquishunionactivities,threatstorelocateplantsto unionfreezones,tightsecuritycontrolslimitingaccesstozonesand/orcompanypremises,promotionofcompanyunionstotheexclusionofotherworkersorganizations,refusaltohirepersonswithhistoryofinvolvementinunionsorinterestinjoiningsuchorganizations.yf9999'dxd Level 1 Level 2 Level 3 Level 4 Level 5($$   1  (2$ e!  ]_*^xC<< C&  =$    27    _XXInternational_Labour_ԀConference,81stSession1994,ReportIII(part4B),para.169.#X~2XT# CRight ParRight-Aligned Paragraph NumbersI.A.1.a.(1)(a)i)a)3|D%($ > =$    28    _XXTripartiteDeclarationofPrinciplesconcerningMultinationalEnterprisesandSocialPolicy,ILO  GoverningBody,204thSession,November1977.#X~2XW# e =$    33    _XX_Economisti_Ԁ_Associati_Ԁ(1995).EasternAfricanSurveyofForeignInvestors:SummaryofMain  Findings,Bologna,Italy.#X~2XT#  _"  _XX Manufacturersareaffordedafulldutyrebateon  importedrawmaterialorcomponentsforusesolelyintheprocessingofgoodsfortheexportmarket....ThisfacilityensuresthatacompanylocatedanywhereinLesothocanhaveeffectiveExportProcessingZonestatus.InvestorsGuidetoLesotho,_LNDC_,Maseru, xx (Lesotho),_n.d._ ` =$    15    _XXCountryreportNamibia/Swaziland4thQuarter1995#X~2XT#XX~2,TheEconomistIntelligenceUnit,London  (UK),1995,p.28.#X~2X# !V"#E%V]i*ldt*OLE*>$"Small Circle"0  ##37=CIQYag1.a.i.(1)(a)(i)1)a) Level 1 Level 2 Level 3 Level 4 Level 5("$ Figure    q*r(A<< cWPC .  pXXXX,,,,519art (jd(jd#?@?#?#?@? )| )|   A 226ffffffֿp= ף(\?TQ  +  )|  )|  )|   )|  )|  )|?  )|  )|   ) |   ) |   ) |   ) |   ) |  )|  )|  )|  )|  )|?  )|  )|  )|  )|  )| 4oCA"Arial Regular )|  )|=AArial Bold )|  )|CA"Arial Regular )|  )|CeeA"Arial Regular )|  )|CeeA"Arial Regular )|  )|CeeA"Arial Regular )|  )|CeeA"Arial Regular )|  )|CA"Arial Regular )|  )|C  A"Arial Regular )|  )|C eeA"Arial Regular ) |  ) | C A"Arial Regular ) |  ) | C A"Arial Regular ) |   ) | C A"Arial Regular ) |   ) |    // ?Table 5.2 Perceived Severity of Problems Related to the Recruitment/Management of LabourAverage score (1)Legendd QP@Cost of labourTrade union restrictionsOther labour regulations+Regulations concerning expatriate personnelLow productivityLack of skilled labour%Lack of middle management/technicians ?ffffff?@@333333@ @ @ (jd (LOA"Arial RegularOFFF @    Table5.2PerceivedSeverityofProblemsRelatedtothe  RIAArial BoldIFFF @    Recruitment/ManagementofLabour13 S 9R R S 99;S ;  RS S ; 13  RMM; RFF; R@@;)  S   S W  tS   S    6 S y   S )13  zN z13   zz13 z+13  \ \+13  4OA"Arial RegularOlll @    1.613  N 13   13 /+13 +13 $OA"Arial RegularOlll @    1.913  ;N uuS;13  V ;S;SV13 S;uSV+13 yuRuRy+13 BOA"Arial RegularOlll @    2.113  N  13   13   +13 +13 WOA"Arial RegularOlll @    2.613  N 7 7  13      13  7 R  +13 6 6   +13 F  OA"Arial RegularOlll @    2.913  ^ N  ^ 13  x  ^ ^ x 13 ^   x +13   @ @ +13   OA"Arial RegularOlll @    3.213  N   13     13     +13     +13  y OA"Arial RegularOlll @    3.2  +OA"Arial RegularOlll @    Averagescore(1)3  3 -OA"Arial RegularO;;; @    Costoflabour3  cc3 /%OA"Arial RegularO;;; @    Tradeunionrestrictions3  3  OA"Arial RegularO;;; @    Otherlabourregulations3  %%3 (POA"Arial RegularO;;; @    Regulationsconcerningexpatriatepersonnel3  3 HOA"Arial RegularO;;; @    Lowproductivity3   3   OA"Arial RegularO;;; @    Lackofskilledlabour3  G G 3  r OA"Arial RegularO;;; @    Lackofmiddlemanagement/technicians3  R 3 7: OA"Arial RegularO @    03  R 3  73 OA"Arial RegularO @    13 R3 7-OA"Arial RegularO @    23 R3 7&OA"Arial RegularO @    33 !R3 "7 OA"Arial RegularO @    4OA"Arial RegularO @    4)*+(&OLE 2.0 Box <=8C HKKKK*y  <<= 8C*xA<< Byy' dxdP Pd  ddzzzz'dxdyyyy'dxd =$    29    _XXCaseNo.1383(Pakistan),CFA253rdReport,p.26.#X~2XT#C:\OFFICE\WPWIN\TEMPLATE\STANDARD.WPT =$    38    _XXOECDDoc.COM/_DEELSA_/TD(95)7,p.44.#X~2XT#  =$    6    _/XXXXUKUS.,/0; X/X# /0;S#Someinvestmenthasalsotakenplaceinthe_EPZs_ԀofCentralAmerica,theCaribbeanandAfrica,  primarilyinordertotakeadvantageofpreferentialaccesstomarketsinindustrializedeconomies.#X~2X#ԀUS.,UK.,r<6X9`("Courier 10cpiXx6X@8;X@ 1 e!  _/XXXX#X~2XX/X+# =    21    XX~2Section8,para.2,_NEPZ_ԀAct,1995.20; C:\OFFICE\WPWIN\TEMPLATE\STANDARD.WPT 7 =$    14    _XX_SIDC_ԀBusinessReports1990and1992,SwazilandIndustrialDevelopmentCorporation,Mbabane  (Swaziland).#X~2XT#ԂLevel 1Level 2Level 3Level 4Level 5(P$ Table  1  U 0 *#  XXSource:RomeroA.T.,LabourandExportprocessingZones:SituationandPressuresforChange,Development  PolicyReview,Vol.13,No.3(September1995),pp.2723.#X~2X)#)L  Z(CG Times Regular  =$    16    _XX_SIDC_ԀBrochureYourPartner,SwazilandIndustrialDevelopmentCorporation,Mbabane  (Swaziland),_n.d._#X~2XT#XX~2;_SIDC_ԀBusinessReport1992,atnote13.#X~2XS#WPWin 6.0/OLE 1.0 Prefix Information MarkerWPDraw30.Chartdࡱ;   !"#$%&'()*+,-./0Root Entrya.@pIPOle 9WPG200CompObjZ)F! WPWin61[2]ࡱ a.@pWP Draw 3.0 Chart Embed SourceWPDraw30.Chartࡱ; ]ࡱ; WPC .  pXXXX,,,,519art (jd(jd#?@?#?#?@? )| )|   A 226ffffffֿp= ף(\?TQ  +  )|  )|  )|   )|  )|  )|?  )|  )|   ) |   ) |   ) |   ) |   ) |  )|  )|  )|  )|  )|?  )|  )|  )|  )|  )| 4oCA"Arial Regular )|  )|=AArial Bold )|  )|CA"Arial Regular )|  )|CeeA"Arial Regular )|  )|CeeA"Arial Regular )|  )|CeeA"Arial Regular )|  )|CeeA"Arial Regular )|  )|CA"Arial Regular )|  )|C  A"Arial Regular )|  )|C eeA"Arial Regular ) |  ) | C A"Arial Regular ) |  ) | C A"Arial Regular ) |   ) | C A"Arial Regular ) |   ) |    // ?Table 5.2 Perceived Severity of Problems Related to the Recruitment/Management of LabourAverage score (1)Legendd QP@Cost of labourTrade union restrictionsOther labour regulations+Regulations concerning expatriate personnelLow productivityLack of skilled labour%Lack of middle management/technicians ?ffffff?@@333333@ @ @ (jd (LOA"Arial RegularOFFF @    Table5.2PerceivedSeverityofProblemsRelatedtothe  RIAArial BoldIFFF @    Recruitment/ManagementofLabour13 S 9R R S 99;S ;  RS S ; 13  RMM; RFF; R@@;)  S   S W  tS   S    6 S y   S )13  zN z13   zz13 z+13  \ \+13  4OA"Arial RegularOlll @    1.613  N 13   13 /+13 +13 $OA"Arial RegularOlll @    1.913  ;N uuS;13  V ;S;SV13 S;uSV+13 yuRuRy+13 BOA"Arial RegularOlll @    2.113  N  13   13   +13 +13 WOA"Arial RegularOlll @    2.613  N 7 7  13      13  7 R  +13 6 6   +13 F  OA"Arial RegularOlll @    2.913  ^ N  ^ 13  x  ^ ^ x 13 ^   x +13   @ @ +13   OA"Arial RegularOlll @    3.213  N   13     13     +13     +13  y OA"Arial RegularOlll @    3.2  +OA"Arial RegularOlll @    Averagescore(1)3  3 -OA"Arial RegularO;;; @    Costoflabour3  cc3 /%OA"Arial RegularO;;; @    Tradeunionrestrictions3  3  OA"Arial RegularO;;; @    Otherlabourregulations3  %%3 (POA"Arial RegularO;;; @    Regulationsconcerningexpatriatepersonnel3  3 HOA"Arial RegularO;;; @    Lowproductivity3   3   OA"Arial RegularO;;; @    Lackofskilledlabour3  G G 3  r OA"Arial RegularO;;; @    Lackofmiddlemanagement/technicians3  R 3 7: OA"Arial RegularO @    03  R 3  73 OA"Arial RegularO @    13 R3 7-OA"Arial RegularO @    23 R3 7&OA"Arial RegularO @    33 !R3 "7 OA"Arial RegularO @    4OA"Arial RegularO @    4BOlePartOlePres000H&1$ &  f  $1  ^&Arial3-- .  &Arialǟ-&Arial-"System--f2 ?Table 5.2 Perceived Severity of Problems Related to the             - -&Arial-- .  --72 4l Recruitment/Management of Labour         4u---$-----%---- !:--%::---$-:h----%-:h--- %-%%:-- %3-bb:-- %p-:--- ! !  !  ! ! ! ! ! ! ! ! !---- ! ! ! ! ! ! ! ! ! ! ! !---- ! ! ! ! ! ! ! ! ! ! ! !---- ! ! ! ! ! ! ! ! ! ! ! !---- ! ! ! ! ! ! ! ! ! !} !y !u---- ! ! !| !x !t !p !m !i !e !a !] !Y---- $40-- -%40-- !c- -%00--- $04400-- -%04400-- !--%00-&Arialo- -  .  -- 2  1.6---- $GB-- -%GB-- !u- -%BB--- $BGGBB-- -%BGGBB-- !1--%11BB1--  .  -- 2 21.9?--- $SN-- -%SN-- !- -%NN--- $NSSNN-- -%NSSNN-- !=--%==NN=--  .  -- 2 >2.1K--- $qm-- -%qm-- !- -%mm--- $mqqmm-- -%mqqmm-- ![--%[[mm[--  .  -- 2 ]2.6j--- $-- -%-- !- -%--- $-- -%-- !n--%nnn--  .  -- 2 o2.9|--- $tpptt-- -%tpptt-- !t- -%tt--- $tpt-- -%tpt-- !w--%ww--  .  -- 2 3.2--- $XSSXX-- -%XSSXX-- !X- -%jXXjj--- $XSfjX-- -%XSfjX-- !Z--%hZZhh--  .  -- 2 e3.2e--  .  -- !2 M Average score (1)MZ---&Arial- -  .  -- 2 #}Cost of labour#----  .  -- +2 ZTrade union restrictions----  .  -- +2 WOther labour regulations----  .  -- H2 +Regulations concerning expatriate personnel----  .  -- 2 vLow productivity----  .  -- (2 cLack of skilled labour--vv--  .  -- ?2 z%Lack of middle management/techniciansz---4--&Arialǟ-- .  -- 2 A0A---4-- .  -- 2 A1A---343-- .  -- 2 A02A6---p4p-- .  -- 2 Am3As---4-- .  -- 2 A4A-ࡱ;  METAFILEPICT1(&1$  f  $1  ^&Arial3-- .  &Arialǟ-&Arial-"System--f2 ?Table 5.2 Perceived Severity of Problems Related to the             - -&Arial-- .  --72 4l Recruitment/Management of Labour         4u---$-----%---- !:--%::---$-:h----%-:h--- %-%%:-- %3-bb:-- %p-:--- ! !  !  ! ! ! ! ! ! ! ! !---- ! ! ! ! ! ! ! ! ! ! ! !---- ! ! ! ! ! ! ! ! ! ! ! !---- ! ! ! ! ! ! ! ! ! ! ! !---- ! ! ! ! ! ! ! ! ! !} !y !u---- ! ! !| !x !t !p !m !i !e !a !] !Y---- $40-- -%40-- !c- -%00--- $04400-- -%04400-- !--%00-&Arialo- -  .  -- 2  1.6---- $GB-- -%GB-- !u- -%BB--- $BGGBB-- -%BGGBB-- !1--%11BB1--  .  -- 2 21.9?--- $SN-- -%SN-- !- -%NN--- $NSSNN-- -%NSSNN-- !=--%==NN=--  .  -- 2 >2.1K--- $qm-- -%qm-- !- -%mm--- $mqqmm-- -%mqqmm-- ![--%[[mm[--  .  -- 2 ]2.6j--- $-- -%-- !- -%--- $-- -%-- !n--%nnn--  .  -- 2 o2.9|--- $tpptt-- -%tpptt-- !t- -%tt--- $tpt-- -%tpt-- !w--%ww--  .  -- 2 3.2--- $XSSXX-- -%XSSXX-- !X- -%jXXjj--- $XSfjX-- -%XSfjX-- !Z--%hZZhh--  .  -- 2 e3.2e--  .  -- !2 M Average score (1)MZ---&Arial- -  .  -- 2 #}Cost of labour#----  .  -- +2 ZTrade union restrictions----  .  -- +2 WOther labour regulations----  .  -- H2 +Regulations concerning expatriate personnel----  .  -- 2 vLow productivity----  .  -- (2 cLack of skilled labour--vv--  .  -- ?2 z%Lack of middle management/techniciansz---4--&Arialǟ-- .  -- 2 A0A---4-- .  -- 2 A1A---343-- .  -- 2 A02A6---p4p-- .  -- 2 Am3As---4-- .  -- 2 A4A- GSP IILS NIE SMEsremittabilityNAFTA IKEA  *#  (1)Intervieweeswereaskedtorankeachconstraintona1to5scalewitha<1>meaning noobstacleanda<5>meaning veryseriousobstacle.XXSource:_Economisti_Ԁ_Associati_Ԁ(1995),EasternAfricaSurveyofForeignInvestors:MainFindings,  mimeo,Bologna,Italy#X~2X#.C:\OFFICE\WPWIN\TEMPLATE\STANDARD.WPT a =$    *    _XXThisreporthasbeenpreparedby_Joost_Ԁ_Kooijmans_ԀandDavid_Tajgman_ԀoftheILOSouthernAfrican  _Multidisciplinary_ԀAdvisoryTeam,Harare,and_Aurelio_Ԁ_Parisotto_ԀoftheInternationalInstitutefor_Labour_Studies,Geneva.#X~2XS#C:\OFFICE\WPWIN\TEMPLATE\STANDARD.WPTLevel 1Level 2Level 3Level 4Level 5 _ =    12    XXIdem,p.7.20;   _"  _XXIncentivesinNamibiainclude  *0 X areducedtaxliabilitybetween3.5%and  17.5%,dependingonthepercentageofgoodsexported; X4X4 *0 X exemptionfromcorporatetax,customs  duties,salestaxes,transfertaxesandstampdutiesfor_EPZ_Ԁenterprises; X4X4 *0 X 10%taxondividendsfornonresident @@ shareholders; X4X4 *0 X nocapitalgainstax; X4X4 *0 X trainingincentivesforNamibianemployees   through75%reimbursementoftrainingcostsbytheGovernment.'dxd d  e!  _/XXXX =    9    /0; X/X# /0;+#Idem,p.49.#X~2X#Table_C  =$    30    _XXReportoftheCommitteeofExpertsontheApplicationofConventionandRecommendations,1991,  p.149.#X~2XW# =$    31    _XXIdem,1994,p.199.#X~2XW#  _"  _XXUKUS.,   @ WorkingConditionsin_EPZs_Ԁ   Concernhasoftenbeenexpressedontheworkingconditionsin_EPZs_,inparticularwithrespecttolengthyworkinghours,nightshifts,overtime,highlabourturnover.Theskillsrequirementsof_EPZ_productionaregenerallyminimal.Trainingisonthejobandoflimitedduration.Themajorityofworkersarewomen,manyofwhomareunlikelytomakelongtermcareersinthefirmswheretheyareemployed.Becauseoftheshorttermnatureof_EPZ_Ԁemployment,thereisnoincentiveforfirmstoinvestintrainingandprofessionaldevelopmentandtheacquisitionofskillsis,onthewhole,poor.Discipline,respectfordeadlinesandageneralexposuretomodernindustrialorganizationappeartobethemainassetsthatproductionworkersindevelopingcountrieshavederivedfromtheiremploymentexperiencein_EPZs_.US.,UK.,J????'dxdd@  w =$    7    _XXReportoftheTripartiteStudyTourtoMauritiusandKenya,by:_ZCTU_/_EMCOZ_/_GOVT_,Harare  (November1994).#X~2XS# =$    8    _XX_Heyn_Ԁ(1988),atnote4,pp.15and6567.( (d =$    39    _XXԀTheEconomist, Consciencesandconsequences,3June1995.#X~2XT# =$    32    _XXIdem,1993,pp.2178.#X~2XW# ! _"  _XX In1944,theConstitutionoftheILOwas  supplementedbytheinclusionoftheDeclarationofPhiladelphia,whichreaffirmedthefundamentalprinciplesonwhichtheOrganizationisbasedand,inparticular,thatfreedomofexpressionandofassociationareessentialtosustainedprogress....TheprinciplesthusenunciatedintheConstitutionareapplicabletoallthememberStatesoftheOrganization.#X~2X+#XX~2CommitteeofExpertsontheApplicationof   ConventionsandRecommendations,_ILC_ԀReportIII(Part4B),ILOGeneva(1994),p.2.#X~2X'#TABLE ATABLE AAcrobat PDFWriter,LL,0c:\office\wpwin\wpdocs\box-pie.les *#  _XXSource:_LNDC_ԀAnnualReport1993/4#X~2X+# ' _"  _XXXX0; XX  @ # 0;+#APost_EPZ_ԀEra?   Asiaisnoteworthyinanotherway,asitseemstobemakingthetransitiontoa post_EPZ_Ԁera.Competitionforinvestmentonanindividualcountrybasisseemstoevolveintoregionalarrangementsbasedonresource_complementality_.AgoodexampleisthenewlyformedgrowthtriangleofSingapore,MalaysiaandIndonesia.ThethreecountriescomplementeachotherinthatSingaporeprovideshighqualityservices,Malaysiatheintermediatevalueaddedproduction,andIndonesiatheunskilledlowcost_labour_.Theproximityoftheseproductionfactorsisthemainincentiveforinvestors;incentivesintheclassicalsenseasseenin_EPZs_Ԁdonolongerplayaroleofsignificance.* `(CG TimesScalable  =$    4    _XX_Heyn_ԀC., MultinationalEnterprisesandEmploymentintheMauritianExportProcessingZone,  MultinationalEnterprises_Programme_,WorkingPaperNo.52,ILO,Geneva,1988,p.17#X~2XS# U _"  _XXXX0; XX# 0;+# Wehavewitnessedasteadyriseinthenumberof  exportorientatedmanufacturingenterpriseswheremost,ifnotall,oftheiroutputisdevotedtoexport.Thetextileindustryseemstohavetakenthelead.Giventhelimitedsizeofourinternalmarket,ourfutureliesinexternalmarkets,towhichwemustexportasignificantportionofwhateverweproduce._BDC_ԀAnnualreport1994,p.15* `(CG TimesScalable  _"  _XX Wehavewitnessedasteadyriseinthenumberof  exportorientatedmanufacturingenterpriseswheremost,ifnotall,oftheiroutputisdevotedtoexport.Thetextileindustryseemstohavetakenthelead.Giventhelimitedsizeofourinternalmarket,ourfutureliesinexternalmarkets,towhichwemustexportasignificantportionofwhateverweproduce._BDC_ԀAnnualreport1994,p.15  e!  _XXXX =    19    0; X/XSection56,para.2,_ZEPZ_ԀAct,1994.#XX /0;#* `(CG TimesScalable 1 e!  _XXXX =    21    0; X/X# /0;+#0; Section8,para.2,_NEPZ_ԀAct,1995.* `(CG TimesScalable(9 Z 6Times New Roman Regular) `,CG Times )Scalable e!  _ =    25    XX0; _MEPZ_ԀAct,1995,Section7.(9 Z 6Times New Roman Regular) `,CG Times )Scalable e!  _Ԁ =    26    XX0; Idem.(9 Z 6Times New Roman Regular) `,CG Times )Scalable(9 Z 6Times New Roman Regular V e!  _/XXXX#X~2XX/X+# =    19    XX~2Section56,para.2,_ZEPZ_ԀAct,1994./0; #/XX /0;#  _"  _sYIEz|ph@ HKKKK@E334 454444 45444544 45444544 45444544 45444544 45444544 45444544 45444544 45444544 45444544 45444544 45444544 45444544 45444544 45444544 45444544 45444544 444544OBJECT #0001WPCM!hhpXXXX,,,,519art 4,K a,K #?Q@$@#?#?@? )| )|   22226ffffffֿp= ף(\?TQ  )|   )|  )|  )|   )|   )|  )|?  )|  )|   ) |   ) |   ) |   ) |   ) |  )|  )|  )|  )|  )|?  )|  )|  )|  )|  )| 4o "Zdd &)'K "Fdd "Fdd "Fdd "Fdd "Fdd "Fdd "Fdd "Fdd CA"Arial Regular )|  )|CeeA"Arial Regular )|  )|CeeA"Arial Regular )|  )|CeeA"Arial Regular )|  )|CeeA"Arial Regular )|  )|CeeA"Arial Regular )|  )|CeeA"Arial Regular )|  )|CeeA"Arial Regular )|  )|CeeA"Arial Regular )|  )|C eeA"Arial Regular ) |  ) | C A"Arial Regular ) |  ) | C A"Arial Regular ) |   ) | C A"Arial Regular ) |   ) |   // KLNDC: Employment by IndustryLegendd Q&@Agro Industries!$~jt?! ffffff@@Garments, textiles and Leather!$ʡE?! ffffffQ@@Commercial Services!$&1?! ffffff$@@)Electronics, Engineering and Construction!$Mb?! @@Wholesale and Retail!$Dl?! @@Operational Services!${Gz?#  8 ,K  5M ) OA"Arial RegularOjjj @    LNDC:EmploymentbyIndustry+5  6TT+5 7OA"Arial RegularO @    AgroIndustries+5 8TT+5 9OA"Arial RegularO @    Garments,textilesandLeather+5 :5TT5+5 ;5OA"Arial RegularO @    CommercialServices+5 <LTTL+5 =LOA"Arial RegularO @    Electronics,EngineeringandConstruction+5  >cTTc+5 ?cOA"Arial RegularO @    WholesaleandRetail+5 @z5T5Tz+5 AzOA"Arial RegularO @    OperationalServices5 B< A5  C 5 D ~ 5  E O 5 F w{5 GAw{5 H ) ` OA"Arial RegularO555 @    7.6% I B OA"Arial RegularO555 @    69.6% J 9 OA"Arial RegularO555 @    10.2% K  OA"Arial RegularO555 @    4.7% LE $Q OA"Arial RegularO555 @    6.9% M( , OA"Arial RegularO555 @    1%'n 7VL  ArialK``]s'0inh Cd7~M  z z ArialLocation of FilesFiguresMastersMacrosMainDictionaryPathSuppDictionaryPath Button BarsColor Palettes999.99ww,999.99wwTypeover Rounded Rectangle Frame Window AttributesWindow Position p@ WPWin 6.0/OLE 1.0 Prefix Information MarkerWPDraw30.ChartHࡱ;   !"Root Entrya.@p*VOle 9WPG20$CompObjZ)F! WPWin61[7]ࡱ a.@pWP Draw 3.0 Chart Embed SourceWPDraw30.Chartࡱ; P" ࡱ; WPCM!hhpXXXX,,,,519art 4,K a,K #?Q@$@#?#?@? )| )|   22226ffffffֿp= ף(\?TQ  )|   )|  )|  )|   )|   )|  )|?  )|  )|   ) |   ) |   ) |   ) |   ) |  )|  )|  )|  )|  )|?  )|  )|  )|  )|  )| 4o "Zdd &)'K "Fdd "Fdd "Fdd "Fdd "Fdd "Fdd "Fdd "Fdd CA"Arial Regular )|  )|CeeA"Arial Regular )|  )|CeeA"Arial Regular )|  )|CeeA"Arial Regular )|  )|CeeA"Arial Regular )|  )|CeeA"Arial Regular )|  )|CeeA"Arial Regular )|  )|CeeA"Arial Regular )|  )|CeeA"Arial Regular )|  )|C eeA"Arial Regular ) |  ) | C A"Arial Regular ) |  ) | C A"Arial Regular ) |   ) | C A"Arial Regular ) |   ) |   // KLNDC: Employment by IndustryLegendd Q&@Agro Industries!$~jt?! ffffff@@Garments, textiles and Leather!$ʡE?! ffffffQ@@Commercial Services!$&1?! ffffff$@@)Electronics, Engineering and Construction!$Mb?! @@Wholesale and Retail!$Dl?! @@Operational Services!${Gz?#  8 ,K  5M ) OA"Arial RegularOjjj @    LNDC:EmploymentbyIndustry+5  6TT+5 7OA"Arial RegularO @    AgroIndustries+5 8TT+5 9OA"Arial RegularO @    Garments,textilesandLeather+5 :5TT5+5 ;5OA"Arial RegularO @    CommercialServices+5 <LTTL+5 =LOA"Arial RegularO @    Electronics,EngineeringandConstruction+5  >cTTc+5 ?cOA"Arial RegularO @    WholesaleandRetail+5 @z5T5Tz+5 AzOA"Arial RegularO @    OperationalServices5 B< A5  C 5 D ~ 5  E O 5 F w{5 GAw{5 H ) ` OA"Arial RegularO555 @    7.6% I B OA"Arial RegularO555 @    69.6% J 9 OA"Arial RegularO555 @    10.2% K  OA"Arial RegularO555 @    4.7% LE $Q OA"Arial RegularO555 @    6.9% M( , OA"Arial RegularO555 @    1%'n 7VL  ArialK``]s'0inh Cd7~M  z z ArialLocation of FilesFiguresMastersMacrosMainDictionaryPathSuppDictionaryPath Button BarsColor Palettes999.99ww,999.99wwTypeover Rounded Rectangle Frame Window AttributesWindow Position p@ BOlePartOlePres000("    "3f3333f333ff3fffff3f3f̙3f3333f3333333333f3333333f3f33ff3f3f3f3333f3333333f3̙333333f333ff3ffffff3f33f3ff3f3f3ffff3fffffffffff3fffffff3fff̙ffff3fffff???__ߟ߿3f3333f333ff3fffff3f3f̙3f3f3333f333ff3fffff̙̙3̙f̙̙̙3f̙3f3f3333f333ff3fffff3f3f̙3f45  !Q&Arial-- .  "System--12 5LNDC: Employment by Industry         -5B(- !!--%!!00!-&Arial{-- .  --2 ?Agro Industries-5B(""- !!--%!!00!-- .  --42 ?Garments, textiles and Leather  -5B(UU"UU"- !!--%!!00!-- .  --$2 ?Commercial Services  -5B(0` - !!--%!!00!-- .  --E2 ?)Electronics, Engineering and Construction $-5B(- !!--%!!00!-- .  --%2 ?Wholesale and Retail  -5B(- !!--%!!00!-- .  --%2 ?Operational Services ---6${tm~e}\~TLD>42137;?DI\---6%{tm~e}\~TLD>42137;?DI\---$FOYYF---%FOYYF--- $^a^^--- %^a^^---$dnvad---%dnvad---$|g|---%|g|---$k---%k-&Arial-- .  -- 2 R7.6%R-- .  --2 Eg69.6%E~-- .  --2 10.2%-- .  -- 2 4.7%-- .  -- 2 x6.9%x-- .  -- 2 c1%c-7ࡱ;  METAFILEPICT"<"    "3f3333f333ff3fffff3f3f̙3f3333f3333333333f3333333f3f33ff3f3f3f3333f3333333f3̙333333f333ff3ffffff3f33f3ff3f3f3ffff3fffffffffff3fffffff3fff̙ffff3fffff???__ߟ߿3f3333f333ff3fffff3f3f̙3f3f3333f333ff3fffff̙̙3̙f̙̙̙3f̙3f3f3333f333ff3fffff3f3f̙3f45  !Q&Arial-- .  "System--12 5LNDC: Employment by Industry         -5B(- !!--%!!00!-&Arial{-- .  --2 ?Agro Industries-5B(""- !!--%!!00!-- .  --42 ?Garments, textiles and Leather  -5B(UU"UU"- !!--%!!00!-- .  --$2 ?Commercial Services  -5B(0` - !!--%!!00!-- .  --E2 ?)Electronics, Engineering and Construction $-5B(- !!--%!!00!-- .  --%2 ?Wholesale and Retail  -5B(- !!--%!!00!-- .  --%2 ?Operational Services ---6${tm~e}\~TLD>42137;?DI\---6%{tm~e}\~TLD>42137;?DI\---$FOYYF---%FOYYF--- $^a^^--- %^a^^---$dnvad---%dnvad---$|g|---%|g|---$k---%k-&Arial-- .  -- 2 R7.6%R-- .  --2 Eg69.6%E~-- .  --2 10.2%-- .  -- 2 4.7%-- .  -- 2 x6.9%x-- .  -- 2 c1%c-7  _"  _XX   IncentivesandOtherConcessionsin_EPZs_   Incentivesandotherconcessionsofferedtoinvestorsin_EPZs_varyfromcountrytocountry.Thefollowinglistsumsuptheincentivesandconcessionscommonlyfoundin_EPZs_:̄0 X Exemptionfromcorporateincometax(taxholiday)XX Є0 X _Concessionary_ԀrateofincometaxxxXX Є0 X Taxexemptionondividends@@XX Є X Repatriationofdividendsbyforeigners   Є X Importationofgoodsduty/taxfree   Є0 X Dutyfreeexportsoffinishedproducts XX Є0 X Exemptionfromimport/exportcontrolregime` ` XX Є0 X Exemptionfromforeignexchangecontrolregime( ( XX Є0 X Taxexemptionontransferofshares XX Є0 X Workpermitsforforeigntechnical,managerialand   trainingstaff XX Є0 X Exemptionfromincometaxonemolumentspaidto H H  foreignemployees XX Є0 X Exemptionfrom_labour_ԀstandardsXX Є X Highqualityinfrastructure  Є X Traininggrants hh Source:_SAMAT_;EnvironmentalIssuesand_EPZS_:A  Literaturereview,TrainingandResearchSupport_Centre_,  Harare/ILOInterdepartmentalProjectonEnvironmentandtheWorldofWork,19945. e!  _/XXXXX~2XX/X/XXXXXXX/X  ,.I95z h  `7'@@@Esl ""TRW6&3'6&A43'T ""   `     h      p     @0`SOUTHERNAFRICAMULTIDISCIPLINARYADVISORYTEAM   @  8`INTERNATIONAL_LABOUR_ԀORGANIZATION    bXX~2@3` _Labour_ԀStandardsinExportProcessingZones  H @ 9` ASouthernAfricanPerspective   X~2Xb @nn<`ForPresentationatthe 8-(+ @n n .`1996Meetingofthe_SADC_Ԁ@@W W 6bEmploymentand_Labour_ԀSector@bb@`Lilongwe,Malawi@A`15April1996  /L+.   TableofContents     ExecutiveSummary!!". "_i_Ԉ  INTRODUCTION!!". 1 ` I.  THECONCEPTANDSTRATEGYOFEXPORTPROCESSINGZONES!!".M1 8    1. ` Theconceptdefined!!".61  `   2. ` Thebroadaimofthestrategy!!".@3  L  II.  THEDEVELOPMENTANDGROWTHOFEXPORTPROCESSING   0  ZONES#!!". ""#4     1. ` Developmentof_EPZs_!!".@@64     2. ` ...InAsia!!".4 4 -6 p 0  3. ` ...InLatinAmericaandtheCaribbean#!!".  H""#7 \   4. ` ...InAfrica!!". /8 H   III.0  EXPORTPROCESSINGZONESAND_LABOUR_ԀSTANDARDS \"" 0  INSOUTHERNAFRICA#I!I!~".@@,""#11 H   1. ` Lesothosforeigninvestmentstrategy:thenear_EPZ_ԀexperienceI!I!~".((a11     2. ` BotswanasinvestmentpoliciesI!I!~".A12     3. ` SwazilandsindustrialdevelopmentI!I!~".TTE13    4. ` SouthernAfrican_EPZ_s:  0  0` ""TheSchemesofMalawi,NamibiaandZimbabwe#I!I!~".N` "` "#14  IV.0     APPLICATIONOFINTERNATIONAL_LABOUR_ԀSTANDARDSX "" 0  INEXPORTPROCESSINGZONES#I!I!~".4""#20 D! V.0     _LABOUR_ԀSTANDARDSANDFOREIGNINVESTMENT#I!I!~".A""#24 #l!   1. ` _Labour_ԀstandardsandinvestmentinflowsI!I!~".J24 $D # 0     2.0` ""Theeffectsofremovingorreducing_labour_Ԁstandardsin_EPZs_#I!I!~"._` "` "#28 %0!$   VI.0  EXPORTPROCESSINGZONESANDECONOMICGROWTH:'#&"" 0  THEOUTLOOKFORSOUTHERNAFRICA#I!I!~".9""#31 (#' 0  1. ` International footlooseinvestment#I!I!~".G""#31 |*%) 0  2. ` Regionspecificinvestment#I!I!~".=""#34 h+&* 0  3. ` The_EPZ_ԀfeverinSouthernAfrica#I!I!~".C""#34 T,'+ CONCLUSIONI!I!~". 38  ,.|)- 8~2XXdXXd8*e!@?` EXECUTIVESUMMARY _ 0  *      _Ԉ d     Thisreportsurveystheroleof_labour_Ԁstandardsinexportprocessingzones(_EPZs_)intheSouthernAfricancontext.RecentlyseveralcountriesinSouthernAfricahavemovedforwardtocreate_EPZ_Ԁschemes,someofwhichincludeconcessionsintheareaof_labour_Ԁstandardsinthehopeofattractingforeigninvestors.Thisreportthereforelooksatthelegal,economicandsocialimplicationsoftheremovalorreductionof_labour_Ԁstandardsin_EPZs_.  ChaptersIexplainstheconceptof_EPZs_Ԁasatoolforcreatingemploymentandincreasingtheexportorientationofanationaleconomy.Theideaofincentivesasameansofattractinginvestmentisintroducedasasystemofexemptionsfromnationalstandards,sometimesincluding_labour_Ԁstandards.ChapterIIdescribesthedevelopmentof_EPZs_Ԁworldwidesincetheirinceptionin1959.Substantialgrowthintheuseof_EPZs_ԀisobservedinAsia,wheresomecountriesarealreadyphasingthemoutafterhavingachievedpolicyobjectives.FormostofAfrica,however,_EPZs_Ԁhavejustrecentlyenteredthescene,withsuccessfulschemesgeneratingsubstantialemploymentthusfaroperatingonlyinEgypt,MauritiusandTunisia.  ChapterIIIfocusesonthesituationinSouthernAfrica.While_EPZs_Ԁareanewphenomenoninthesubregion,somecountriesalreadyhaveincentivedrivenpoliciestoattractforeigninvestment.Althoughnot_EPZs_Ԁinthestrictsenseoftheword,experienceinBotswana,LesothoandSwazilandisinstructiveinthesensethatforeigninvestmentandemploymenthavebeengenerated,whilenoconcessionsweremadeintheareaof_labour_Ԁstandards.ChapterIIIgoesontodescribethe_EPZ_ԀinitiativesrecentlytakenbyMalawi,NamibiaandZimbabwe.AnassessmentismadeofthesocialimplicationsofthesuspensionbyNamibiaandZimbabweoftheirnational_labour_Ԁlawsin_EPZs_.Noteisalsotakenofanamendmenttothe_EPZ_ԀActpendingbeforetheNationalAssemblyofNamibiawhichwouldreinstateapplicationofvirtuallyallofNamibian_labour_Ԁlawin_EPZs_.  ChapterIVillustratesthepotentialconflictswhichexistsbetweeninternational_labour_standardsandtheloweringof_labour_ԀstandardsinSouthernAfrican_EPZs_.ThecommentsofILOsupervisorybodiesinsimilarcasesinothermemberStatesaretakenintoaccountinassessingtheextenttowhichNamibiaandZimbabwearelikelytobeatoddswithinternational_labour_standards.   `     h      p      x   ChapterVassessesthebeliefthatlowered_labour_Ԁstandardsleadtogreaterinvestmentflowsinto_EPZs_.Empiricalevidence,inparticularfromAfrica,suggeststhatreduced_labour_standardswouldnotleadtosubstantialadditionalforeigninvestment.Reductionsfurthermoremightresultinanumberofnegativeeffectson,forexample,thedevelopmentofhumanresourcesandproductivitylevels.Atthe_subregional_Ԁleveltheriskofcompetitionbetween_EPZ_Ԁhostcountriesmightputfurtherpressureon_labour_Ԁstandardsandeffortsatregionalintegration,whileontheinternationalplanetheloweringof_labour_Ԁstandardscouldnegativelyaffecttraderelations.  0,%)   ChapterVI,finally,discussestheoutlookfor_EPZs_ԀinSouthernAfrica.Itlooksat_EPZs_ astransitionalarrangementsaimedtostimulateinternationallycompetitiveeconomies.While_EPZs_Ԁcanbeausefultoolinthisrespect,theycannotcompensateformuchneededoverallstrategiesaimedatembeddingforeigninvestmentandefficientorganizationofproductionfortheinternationalmarket.@G`***     *e!INTRODUCTION  P   AtitsSixteenthMinisterialandTripartiteMeetinginMaseru,Lesotho,on20and21February1995,theSouthernAfrica_Labour_ԀCommission(_SALC_)requestedtheInternational_Labour_ԀOffice(ILO)"toprepareastudyonthesubjectoftheapplicationofnationalandinternational_labour_ԀstandardsinExportProcessingZones(_EPZs_)froma_subregional_Ԁperspectiveby1995/96."_1 0  1      _.Theresultsofthestudyweretobetabledatthenextmeetingof  t _SALC_/Employmentand_Labour_ԀSectorof_SADC_.  Thepresentreportissubmittedpursuanttothatrequest.IthasbeenpreparedbyILO'sSouthernAfricaMultiDisciplinaryAdvisoryTeam(_SAMAT_),basedatHarare,incooperationwiththeInternationalInstitutefor_Labour_ԀStudiesinGeneva.  Thereportassessestheroleof_labour_Ԁstandardsintheperformanceof_EPZs_,inparticularwithregardto_EPZs_ԀinSouthernAfrica.Itspurposeistoassistpolicymakersinthecountriesofthesubregioninthedevelopmentofstrategiesforexportorientedindustrializationandemploymentgeneration.  Thereportisstructuredasfollows:̄  ChapterIintroducestheconceptandstrategyof_EPZs_; \ Є0  ChapterIIprovidesabroadhistoricalandgeographicaloverviewoftheirdevelopment;H"" Є0  ChapterIIIanalyzesthepresentstateofaffairsrelatingto_EPZs_ԀinSouthernAfrica,in 4 particularinthecontextofnational_labour_Ԁlegislation; "" Є0  ChapterIVtheapplicationofinternational_labour_Ԁstandardsin_EPZs_Ԁandtheimplications p  forcountriesintheSouthernAfricansubregion; "" Є0  ChapterVaddressestherelationshipbetween_labour_Ԁstandardsandforeigninvestment;H"" Є0  ChapterVIdiscussestheoutlookforthesuccessof_EPZs_ԀinSouthernAfrica.4 ""  I.  THECONCEPTANDSTRATEGYOFEXPORTPROCESSINGZONES  "  0  1. ` Theconceptdefined %X""" Ѐ  Specialzonesforexportorientedindustriesexistundermanydifferentnames,althoughthename"exportprocessingzone"hasgainedtheupperhandbothinacademicwritingsandinpracticaluse.Broadlyspeaking,thetermrepresentsastrategyforattractingforeigndirectinvestmentandcreatingemploymentthroughtheprovisionofincentivesanddiminutionofstandards(_labour_Ԁlaws,taxationschemes,customsregimes,etc.),undercertainconditions.TheILOdefinedan_EPZ_Ԁasa  -&* 8//XXdXXd88  "clearlydelineatedindustrialestatewhichconstitutesafreetradeenclaveinthe p  customsandtraderegimeofacountry,andwhereforeignmanufacturingfirms \ producingmainlyforexportbenefitfromacertainnumberoffiscalandfinancial H incentives._3 0  2      _4    Thekeyelementsofthe_EPZ_Ԁstrategyhavebeenhighlightedinthedefinitionabove.Toclarifyissuespresentedlater,afewwordsaresaidhereabouttheseelementsandtheirevolutioninrecentyears.*0     Clearlydelineatedindustrialestatesareameansoflimitingtheeffectsandactivitiesof L  _EPZ_Ԁbusinessesontheonehand,andfacilitatingtheprovisionofspecialincentivebenefitsontheother.Infrastructure,forexample,canbespeciallydevelopedandprovidedfor_EPZ_Ԁfirmsiftheyaregatheredtogetherinasmallarea.Monitoringcompliancewiththeconditionsunderwhich_EPZ_Ԁfirmsarerequiredtooperateisalsomadeeasier.Specialprovisionsforworkersin_EPZ_Ԁfirms,suchashousingandtransport,canlikewisebemoreeasilyprovided.Thespillovereffectsofthediminutionofarangeofstandardsaswellasthepreferredtreatmentto_EPZ_Ԁfirmscouldalsobelimitedundertheseconditions.Inrecentyears,therehasbeenamoveawayfromgeographicallydelineatedzonesandtowardsrelianceuponapledgeofoperationswithincertainrequirementsinordertoqualifyfor_EPZ_Ԁstatusandprivileges.Inpractice,thisamountstoasystemofbondedfactorieslocatedthroughoutthehostcountry. "" 0   *  Locationwithinafreetradeenclaveentitlesthe_EPZ_Ԁenterprisetotaxandtarifffreeentry H ofinputstoproduction.Thisloweringoftaxandtariffstandardsisgiveninexchangefortheunderstandingthatthe_EPZ_Ԁenterprise,orenterprisewith_EPZ_Ԁstatus,exportsmostorallofitsproducts.Itrepresentsawaytoofferexportincentivesandfacilitiesforcountriesthatdonotwishtoadoptafullyfledgedfreetraderegime. "" *0     Theaimofan_EPZ_Ԁstrategyistoattractforeignmanufacturingfirmstothehostcountry. @  Suchfirms,itishoped,bringinjectionsoftechnology,developedhumanresources,andcapitaltolessdevelopedcountriesmuchinneedoftheseinputs.Thetypesoffirms(traditionallyapparel/textileproduction,andelectronicsassembly)whichareattractedtoaparticular_EPZ_Ԁwillvarydependingonwhatthe_EPZ_Ԁcountryhastooffer,beitparticularly_favourable_Ԁaccessgeographicortariffwisetotheproductmarket,accesstoaphysicalinputofproduction,orlowcost_labour_Ԁoftherequiredskilllevel.Increasingly,domesticfirmshavebeengranted_EPZ_Ԁstatusprovidedthattheyareabletocomplywiththerequirementssetforforeign_EPZ_Ԁenterprises.Forexample,localbusinessesshouldachievethesameexportlevelasrequiredofforeignenterprises.Surveysinthelate1980shaveshownthatinwelldeveloped_EPZs_Ԁtheshareofdomesticallyownedfirmsonaverageamountedto25%.5P 0  3      ׀Localequityparticipationvaries d*#' considerablyamongthevariouszones,butitgenerallyincreasesovertimeas_EPZs_becomerootedandattracttheattentionoflocalentrepreneurs.InMauritius,forinstance, <,%) acountrywithlongstandingandsuccessful_EPZ_Ԅincentives,theparticipationoflocalcapitalisestimatedtoaccountfor2/3of_EPZ_Ԁactivities._ 0  4      _\""  EE""*0  Productionofgoodsmainly 4  forexporthasbeenthequid   proquoforthegrantingof   incentivesandreductioninnationalstandardsin_EPZs_.Therationaleforthisisthatforeigninvestmentismorelikelytobeattractedifmarketaccessisnotlimitedtothedomesticmarket.Thus,inanincentivesupportedexportorientedenvironmentincreasedmarketaccesswillallowthemanufacturingsectortoexpandmorequickly,resultinginhigherlevelsofeconomicgrowthandemployment._v`|l>.*lx `E   E4 5gv_ E"   ""EE0  2.0` ""Thebroadaimofthestrategy ,!` "` "   Ideally,the_EPZ_Ԁstrategyismeanttobeashorttomediumtermsolutiontotheslowpaceofforeigninvestmentinlessdevelopednations;itismeanttobeanexceptionalconditiondesignedtoinduceforeigncapitalandknowhowtounknown,andperhapsotherwiseunappealingproductionvenues.Duringthelifeofthepolicy,itssuccessasseenfromthehostcountrysperspective,canbemeasuredby   ` theamountofemploymentitcreates; '0!$    ` thefunds,throughwagesandbenefits,itinjectsintotheeconomy; ("%    ` thequalitiesitdevelopsinthehumanresourcesofthehostcountry; x)#&   0 `   ` thetechnologicalandmanagerialknowhowitimpartstothoseinthehostcountry d*#' whocomeincontactwiththe_EPZ_Ԁenterprises;and ` "` " 0  0` ""thebackwardlinkagesthataremadewiththedomesticeconomy.<,%)` "` "  (-&* Thegrantingofincentivesandremovalofstandardsintheshorttomediumtermrepresentcoststothehostcountry.Thesecostsareborneinthehopeoflongtermeconomicandhumanresourcebenefits.Intheidealworld,thefinalsuccessofan_EPZ_Ԁstrategycanbejudgedonlybyitsabilitytofallawayasameansofattractingforeigninterestintheproductioncapacityofthehostcountry.Otherwise,thesubstandardandexceptionalprovisionsbecomethenorm.Itisusefultokeepthislongtermdevelopmentobjectiveinmindwhenconsideringtheissueofstandards,including_labour_Ԁstandards,in_EPZs_.̀ II.  THEDEVELOPMENTANDGROWTHOFEXPORTPROCESSINGZONES  L     1. ` Developmentof_EPZs_  $    ThefirstexportprocessingareawasestablishedinIrelandin1959.Shannonairport,untilthenabusyrefuelingstationfortransatlanticflights,wasrapidlybecomingsuperfluousduetotheintroductionoflongdistancejetaircraft.Inabidtosaveboththeairportandthenationalairline,itwasdecidedtoturntheShannonareaintoafreetradezonetoattractforeignmanufacturingfirmswhichcouldexporttheirproductsbyair.Overtheyears,highvalueaddedindustrieshavedevelopedintheShannonfreetradezone,creatingsome5,641jobs.InthecaseofShannon,noaccommodationswheregivenintheareaof_labour_Ԁstandards.In1965,fiveyearsaftertheShannonzonebecameoperational,thefirstexportprocessingzoneinadevelopingcountry,India,wasestablished._`|lI95~ pn p @En&<4N_ ""̀  By1970,someeight_EPZs_Ԁhad 4 beencreatedindevelopingcountries.Tenyearslater,in1980,thisnumberhadincreasedto55zonesinabout30developingcountries.Today,therearemorethan200suchzonesinatleast70developingcountries,andmorethanhalfofthedevelopingcountriesnowhost_EPZs_orfirmswith_EPZ_Ԁstatus.Ifthistrendcontinues,thenumberofoperational_EPZs_canbeexpectedtocomecloseto300bytheendofthecentury.Likewisethegrowthinemploymentin_EPZs_Ԁhasbeenrapid:from50,000in1970tosome2.4millionin1990,or4.6millioniftheSpecialEconomicZonesinSouthernChinaweretobeincluded.P 0  5       d*#'   "" P+$(   UKUS.,Theexpansionof_EPZs_Ԁinthe1970sandthe1980swasstimulatedbyanumberofchanges intheinternationalorganizationofproductionbylargemultinationalfirms.Technologicalprogressandthereductioninthecostsoftransportandcommunicationsincreasedpossibilitiestofragmentproductionprocessesintodistinctivestagesandtolocatetheminthemostconvenientlocationsworldwideregardlessofthefinaldestinationoftheiroutput.Attractedbysizableincentives,preferentialmarketaccessandlowcostlabour,multinationalfirmsadoptedstrategieswherebysimplemanufacturingactivitiesandlabourintensivestagesofproductionwerelocatedinexportenclavesindevelopingcountriesforexportingtothirdmarketsintheindustrializedcountries.  Theworldwideintegrationoftheproductionnetworksofmultinationalenterprisesalongsimpleintegrationlineswasparticularlystronginthetextilesandgarmentsandelectronicsindustries.Astrikingfeatureof_EPZs_Ԁhasbeentheirdevelopmentintoindustrialmonocultureestatesratherthanintowellbalancedindustrialparksasoriginallyplanned.Forexample,overthreequartersoftheemployeesworkingin_EPZs_ԀinBangladesh,DominicanRepublic,Jamaica,Mauritius,andSriLankaproducetextilesandgarments.ConverselythemajorityofemployeesinBarbados,MalaysiaandtheRepublicofKoreaworkintheelectricalandelectronicproductsindustriesUS.,UK.,\._`Q|lL<8~xu p @Ei80%u_ """""" """""""" """""""" """""""" """""""" """""""" """""""" """""""" """""""" """""""" """""""" """""""" """""""" """""""" """""""" """""""" """""""" """""""" """""""" """""""" """""""" """""""" """"""  /(,   2. ` ...InAsia  p   Halfoftheglobaltotalnumberof_EPZs_ԀarefoundinAsia.Table1describesthetrendsinemploymentinAsiancountriescurrentlyhosting_EPZs_Ԁ(seebelow)._EPZs_ԀinAsiaarebyfarthemostinstructive,asmanyhaveundergonethefulllifecycleofformation,takeoff,maturityanddecline.Forexample,afew_EPZs_Ԁhavemadethetransitionfromrelativelysimple_labour_Ԁintensivemanufacturingprocessessuchastextilesandelectronicsassemblytohightechnologyproductionof,forexample,semiconductors(e.g.,Taiwan,Singapore,andMalaysia).Aslightlywiderrangeofactivitiescanbefoundintheoldest, mature_EPZs_,e.g.,metalproducts,chemicals,precisioninstruments,toys,sportinggoods,butalsodataprocessing.InSriLankaandThailand_EPZ_Ԁstatushasbeengrantedtoalargenumberofcompaniesoperatingoutside_EPZ_Ԁareas.Finally,anumberofcountriesinEastAsiahavephasedout_EPZs_Ԁandconditions_favourable_Ԁtoforeigninvestmenthavebeenextendedthroughouttheeconomy.s`|l;+'l pZ `ET< 4 s  AnimportantfactorcontributingtothesuccessofmanyAsian_EPZs_Ԁisthepresenceofastrongindustrialcoreintheregion.Industrializationandthesubsequentriseincostsof D   ""productionfactorsinJapanhasledtotheoutsourcingof_labour_Ԁintensiveproductionstagestoothercountriesintheregion.Thistrendhasledtotheemergenceofthenewlyindustrializingeconomies(_NIEs_)suchasHongKong,theRepublicofKorea,SingaporeandTaiwan.UKUS.,Sincethelate1980s,agrowingtrendhasbeentheveryrapidgrowthof_EPZ_ԀinvestmentbyfirmslocatedintheseAsian_NIEs_.Investmentfromthe_NIEs_Ԁhasbeenprimarilyaresponsetosharpincreasesindomesticwagelevels,largetradesurpluses,highexchangeratesandgrowingprotectionismabroad.Thesepressurespushed_NIE_Ԁfirmsengagedinlabourintensive,exportorientedindustriestorelocatetothe_EPZs_Ԁofneighbouring ""AsiancountriessuchasIndonesia,Thailand,andthePhilippines,whereopportunitiescouldmoreeasilyspottedevenbysmallinvestorsandwheregeographicalandculturalproximity,andethnicbusinesstiesmadetheorganizationandcoordinationofcrossborderproductionnetworksmuchsimpler._ 0  6      _ԀUS.,UK.,nThisdevelopmentcontinueswithrapidexportorientedindustrializationinChina,where ("% wholeareasofthecountryhavebeencordonedoffintosocalledSpecialEconomicZones.Theprocessofoutsourcingofproductionstagesisexpectedtocontinue,withthelikelyinvolvementofVietNamandCambodiainthenearfuture.  <,%)   Thepresenceofthisrevenueandinvestmentgeneratingindustrialcore,combinedwitha stronganddeliberateemphasisontrainingandeducation,hasenabledsomecountries,suchasTaiwanandSingapore,tomakethetransitiontohightechproductionprocesses.Thesecountries,whichhavecreatedandareoperating_EPZs_Ԁunderuniquecircumstances,aretheexamplesmostoftencitedas_EPZ_Ԁsuccessstories.XX~2 @RRE`Table1@  `EmploymentinExportProcessingZonesandFirmsenjoying_EPZ_ԀstatusinAsiaandthePacific  d  *q78 ddd Xdd Xdd X""q, dT ,dT ,dT ,4dd +  -99   T(- Country 299#X 99 2 Employmentin1986 299#X 99 2 Employmentin1990 6999#X 99 6 Employmentin X 1994 H9997#   d( T 999 8HBahrainBangladeshChina(SpecialEconomicZones)FijiIndiaIndonesiaJordanKorea(Republicof)MalaysiaPakistanPhilippinesSriLankaSyrianArabRepublicTaiwanThailandTongaTurkeySingaporeVietNamUnitedArabEmiratesYemen 4999#!$999 4J.8_n.a._ԈiiI.84,515J.8_n.a._ԈJ.8_n.a._ԈH.817,000H.813,000J.8_n.a._ԈH.841,500H.881,700iiI.81,500H.839,000H.835,000J.8_n.a._ԈG.880,469.iiI.84,750iiI.81,000J.8_n.a._ԈJ.8_n.a._ԈJ.8iiI.81,300J.8_n.a._Ԉ 4999#!9999 4  b.Q4,600  b.Q7,000^.Q2,200,000c.Q_n.a._Ԉa.Q30,000a.Q50,000c.Q_n.a._Ԉa.Q24,700a.Q98,900  b.Q2,000a.Q35,400a.Q55,000c.Q_n.a._Ԉa.Q70,700a.Q12,000c.Q_n.a._Ԉc.Q_n.a._Ԉee`.Q210,000c.Qa.Q12,000c.Q_n.a._Ԉ 69999#!N999 6 z!.AAj_n.a._Ԉx!.AAj20,000n!.AAj3,340,000(1992)x!.AAj11,149x!.AAj16,390x!.AAj95,000 z!.AAj_n.a._Ԉq!.AAj21,910(1991)p!.AAj123,204(1993)1 1 y!.AAj5,914x!.AAj70,000s!.AAj134,572(*) z!.AAj_n.a._Ԉu!.AAj(**)s!.AAj305,373(*) z!.AAj_n.a._ԈEEr!.AAj4,000(1995)u!.AAj(**) z!.AAj_n.a._Ԉx!.AAj24,000 z!.AAj_n.a._Ԉ3)'!c d8   9999 3_n.a._=datanotavailablē=_EPZ_Ԁnotyetornolongeroperational(*)Includingalargenumberofenterprisesthatarenotlocatedwithin_EPZ_Ԁareasbutdoenjoythesamestatusas_EPZ_Ԁenterprises.(**)_EPZ_Ԁnolongeroperational;incentiveshavebeenphasedoutand/orextendedcountrywide.Source:_UNCTAD_, ExportProcessingZones:RoleofForeignDirectInvestmentandDevelopmentalImpact,Doc.TD/B/_WG_.1/6,Geneva,1993;UpdatingandModifications:ILO/_SAMAT_. &T i X~2X  3. ` ...InLatinAmericaandtheCaribbean  x("k     Some80_EPZs_ԀarelocatedinLatinAmericanandCaribbeancountries.AlistofthesecountriesisgiveninTable2.Measuresofsuccessof_EPZs_Ԁinthisregionvaryconsiderablyfromcountrytocountry,andproximityandpreferentialaccesstotheUSmarketareveryimportantfactorsofsuccess.Intermsofemploymentgeneration,MexicoandtheDominicanRepublicareconsideredtobeverysuccessful,havinggenerated608,100and176,300jobsrespectively.Inanumberofothercountries,suchastheBahamas,ChiliandEcuador,Trinidad&Tobago,_EPZs_appearnottohavetakenoffverywell.Aninterestingphenomenon,illustratingthepotentialimportanceofaccesstothedomesticmarketofthehostcountry,istheManausZoneinBrazil, 0T*t whichisalargeprocessingzoneemploying75,000peoplein1990andproducingalmost p exclusivelyforthedomesticmarket,althoughtheincentivesofferedtoattractforeigninvestors \ aresimilartoother_EPZs_. XX~2@RRE`Table2@`EmploymentinExportProcessingZonesandfirmsenjoying_EPZ_ԀstatusinLatinAmericaandthe@D`Caribbean *:; dd dT dT dT 4dd 78"", dT ,dT ,dT ,bdd +  -99  t  T(-Country )99H 99 )Employmentin1986 299#H 99 2Employmentin1990 6999#H 99 6Employmentin1994 H9997#H  d( T 999 |8HAntigua&BarbudaBahamasBarbadosBelizeBrazilChileColombiaCostaRicaDominicaDominicanRepublicEcuadorElSalvadorGrenadaGuatemalaHaitiHondurasJamaicaMexicoMontserratNetherlandsAntillesNicaraguaPanamaSt.Kitts&St.LuciaSt.LuciaSt.VincentTrinidad&Tobago +999$#'999 +I.7_n.a._ԈI.7_n.a._ԈI.7_n.a._ԈI.7_n.a._ԈG.763,00099H.72,00099H.76,700I.7_n.a._ԈI.7_n.a._ԈG.736,000I.7_n.a._Ԉ99H.72,080I.7_n.a._ԈI.7_n.a._Ԉ99H.75,00099H.72,59099H.78,000F.7250,000I.7_n.a._ԈJ.7400I.7_n.a._Ԉ99H.72,060I.7_n.a._ԈI.7_n.a._ԈI.7_n.a._Ԉ99H.72,730 4999#$#A999 4^^bZ.mmP_n.a._Ԉ  bZ.mmP8000`Z.mmP20,000^^cZ.mmP600`Z.mmP75,000aZ.mmP8,500aZ.mmP7,000aZ.mmP6,000^^bZ.mmP_n.a._Ԉ66_Z.mmP150,000^^bZ.mmP_n.a._ԈaZ.mmP3,500^^bZ.mmP_n.a._Ԉ`Z.mmP40,000`Z.mmP43,000aZ.mmP3,000`Z.mmP18,00066_Z.mmP460,000^^bZ.mmP_n.a._Ԉ^^cZ.mmP300^^bZ.mmP_n.a._Ԉ^^cZ.mmP200^^bZ.mmP_n.a._ԈaZ.mmP1,500^^cZ.mmP400^^cZ.mmP400 69999#$#[999 6 z!.i_n.a._Ԉ z!.i_n.a._Ԉ z!.i_n.a._Ԉ z!.i_n.a._Ԉ z!.i_n.a._Ԉ0 0 y!.i9,975 z!.i_n.a._Ԉq!.i75,000(1992) z!.i_n.a._Ԉw!.i176,310 z!.i_n.a._Ԉx!.i50,000 z!.i_n.a._Ԉp!.i118,500(1993)0 0 y!.i5,000x!.i49,500q!.i16,850(1995)w!.i608,100 z!.i_n.a._Ԉ z!.i_n.a._Ԉ z!.i_n.a._Ԉq!.i14,400(1995) z!.i_n.a._ԈDDr!.i2,820(1993) z!.i_n.a._Ԉ {!.i5503)'$#u d8 |  9999 3_n.a._=datanotavailableSource:_UNCTAD_, ExportProcessingZones:RoleofForeignDirectInvestmentandDevelopmentalImpact,Doc.TD/B/_WG_.1/6,Geneva,1993;UpdatingandModifications:ILO/_SAMAT_. %Dw X~2X   4. ` ...InAfrica  h' y Approximately25zonesareinoperationorinpreparationinAfrica.Threecountries(Egypt,MauritiusandTunisia)accountforabout90oftotal_EPZ_ԀemploymentinAfrica.AlistofcountriesandtheemploymentgeneratedisgiveninTable3.XX~28  MauritiuswasthefirstcountryinAfricatocreatean_EPZ_.Movingtowardsindependencein ,& 1968,thecountrywasfacedwitharapidlygrowingworkforceandaneconomyalmostentirelydependentonthesugarindustry.Drivenbytheneedtocreatejobs,theGovernmentfrom1962onissued DevelopmentCertificatestodeveloplocalindustries.Thesecertificatesexemptedindustriesfromtaxationforfiveyears,andprovidedaccesstolongtermloansandprotectionthroughimportdutiesandquotas.Althoughby1970thisstrategyhadresultedinthecreation 0h* of70newenterpriseswhichwereorientedalmostentirelyatthedomesticmarket,itbecameclearthatthisinwardorientedindustrializationwouldnotgeneratesufficientemploymentandeconomicgrowth.Underthesecircumstances,thecreationin1970ofan_EPZ_ԀinMauritiuswasmainlyaimedatjobcreation.Inthisrespect,theMauritianexperiencecanbetermedverysuccessful.By1980,the_EPZ_Ԁhadgeneratedmorethan21,000jobsin101enterprises.Atitspeakin1990,_EPZ_Ԁenterprisesemployedmorethan90,000persons.Thisnumberdeclinedto82,200jobsin494enterprisesin1994.TheMauritian_EPZ_Ԁhasneverbeenrestrictedtoonegeographicallocation.Asystemofbondedfactoriesthroughouttheislandprevails,althoughanumberofindustrialestateshavebeendeveloped.  0  Incentivesofferedto_EPZ_Ԁinvestorsincluded: "" 8  *0` atenyeartotalincometaxreliefoncorporateincome,andreducedtaxreliefthereafter `  upto20years; ` `  8  * ` afiveyeartaxholidayondividends;`  0  * ` dutyfreeproductioninputs;( "" 0  * ` apartialtaxexemptiononreinvestedprofits; "" 0  * ` freerepatriationofprofits,dividendsandcapital;H "" 0  * ` easyaccesstoloansandinvestmentcapital."" 8  In1985thetaxreliefprovisionswererevisedfornewinvestors,providinga15%corporatetaxandatenyearexemptionfromtaxondividends.  8  Intheareaof_labour_Ԁstandards,the1975_Labour_ԀActappliesthroughoutthecountry,including_EPZs_.Section20ofthe1993IndustrialExpansionAct,however,providesfordeviationsfromthe_Labour_ԀActfor_EPZs_.Assuch,separateregulationsapplyto_EPZs_Ԁregardinga)overtimework(undercircumstancescompulsoryin_EPZs_Ԁandcalculateduponaweeklybasisinsteadofadailybasisasistheruleintheremainderofthecountry),b)maternityleave,andc)terminationofemployment(noentitlementtoseverancecompensationifdismissedongroundsofseriousmisconduct)_ 0  7      _.Likewise,wagelevelsforthe_EPZ_ԀaredeterminedthroughWages  _Renumeration_ԀOrders,and,withsomeexceptions,generallyhavebeenlowerthanintheremainderofMauritius._  0  8      _#X~2XJ#XX~28 8  Asregardsassociationalrights,itisnoteworthythatnorestrictionswereimposedonindustrialrelationsandtradeunionactivity.Tradeunionshavebeenactiveinthezonethroughoutitshistory,althoughunionizationappearsnottoexceed10%ofall_EPZ_Ԁworkers.Inpractice,theexerciseofassociationalrightshasbeenhampered.Anumberof_EPZ_Ԁenterpriseshavedeniedaccesstotradeunions,leadingtopoor_labour_Ԁrelationsand,insomecases,towildstrikes.  8  Mauritiusisoftencitedasanexampleofaverysuccessful_EPZ_,undoubtedlyinviewofthehighlyvisibleimpactonemploymentinthesmallislandnation.The reasonsexplainingthesuccessoftheMauritian_EPZ_Ԁaretobefoundinthebackground_socio_Ԅeconomiccharacteristicsofthecountryitself,includingpoliticalstabilityandthequalityofthe_labour_Ԁforceandofthelocalbusinessenvironment,encouragedbythepackagesofincentivesprovidedbythegovernment,inconjunctionwithmarketaccesstotheEECunderthe_Lom_ԀConventions 0  9      . (`", ConnectedtothiswastheinfluxofahighnumberofinvestorsfromHongKongwhichinthe1980saccountedforsome66%oftotalmultinationalparticipationinequity.Thereexistssome `*#. evidencethattraditionalethnictieswithHongKong,aswellaswithFrance,accountforthehighpercentageofinvestorsfromthesecountries,althoughthisrelationshipisfarfromclear.  8  TheMauritian_EPZ_Ԁistheonlyoneofthesome25inAfricathathasreachedmaturity.Initially,employmentinthezoneexpandedrapidlyduetosustainedforeigninvestmentin_labour_Ԅintensiveoperations.Aswagesandworkingconditionsimprove,capitalintensiveproductiongraduallyreplaces_labour_Ԅintensiveactivities,andforeigninvestmentin_labour_Ԅintensiveproductiondecreases.ThepresentdeclineinemploymentintheMauritian_EPZ_Ԁmaypartlybearesultoftheoutsourcingof_labour_ԀintensiveproductionstagestoMadagascar.Mauritiusisthuspresentlyfacingthechallengeofsustainingits_EPZ_Ԁthroughdiversificationandtheintroductionofmoresophisticatedproductiontechniquessoastomakethechangetohighvalueaddedproductionandawayfrom_labour_Ԁintensiveproduction.Thisasyetappearstobeadifficulttask,sinceuntilrecentlyindustriesinthezoneconsistedforsome80%of(_labour_Ԅintensive)garmentsandtextilescompanies.TheGovernmentispresentlypursuingastrategyofhumanresourcesdevelopmenttosupportthetransformationprocess.#X~2X#XX~2`  @RRE` Table3    @"` EmploymentinExportProcessingZonesandfirmsenjoying_EPZ_ԀstatusinAfrica   * dd dT dT dT bdd :;"",d ,qtd ,td ,td +  1??"  p1Country 2?9#H?? 2Employmentin1986 2?9#H?9 2Employmentin1990 -?9?H?9 -Employmentin1994 H9??7#H p ?9? p HCameroonEgyptGhanaKenyaLesothoLiberiaMadagascar Malawi    MauritiusMorocco Namibia  h# NigeriaSenegalTogoTunisia Zimbabwe 499?##P(9?? 4{{D[. 0B[. 025,000C[. 02,600__D[. 0_n.a._Ԉ#X~2X#XX~2__D[. 0_n.a._Ԉ (- __E[. 0700{{D[. 0#X~2X#XX~2{{D[. 0 0 B[. 061,700__D[. 0_n.a._Ԉ#X~2X#XX~2{{D[. 0 h3 {{D[. 0#X~2Xj#XX~2C[. 01,200 h!5 __D[. 0_n.a._Ԉ#X~2X#XX~2B[. 040,000 "7 {{D[. 0 499?##P899? 4;;b.33LKK`.33L25,000a.33L2,600a.33L2,000__Y.33L13,000(1992)b.33L_n.a._Ԉ;;b.33L;;b.33LKK`.33L90,000a.33L1,500;;b.33L;;b.33La.33L1,200a.33L3,970KK`.33L48,000;;b.33L -99??#PH99? -t!t!~".i2419u".i90,000(1995)!!~".i_n.a._ԈH!H!}".i2,800 |".i16,000!!~".i_n.a._Ԉ |".i26,000!!~".i |".i82,200!!~".i_n.a._Ԉ!!~".i!!~".i_n.a._Ԉ!!~".i_n.a._ԈH!H!}".i4,170u".i93,370(1991)!!~".i3)'#PX 0 p  99?? 3_n.a._=datanotavailablē=_EPZ_ԀnotyetoperationalSource:_UNCTAD_, ExportProcessingZones:RoleofForeignDirectInvestmentandDevelopmentalImpact,Doc.TD/B/_WG_.1/6,Geneva,1993;UpdatingandModifications:ILO/_SAMAT_.#X~2X#XX~2 ' [  #X~2X#hXX~2 #X~2Xh#  InSouthernAfrica,thedevelopmentof_EPZs_Ԁisasyetinanearlystage.In1994and )"^ 1995,Malawi,NamibiaandZimbabweadopted_EPZ_Ԁlegislation.Stepsarebeingtakeninthesecountriestoimplementpracticalarrangementsfortheactualestablishmentofthezones,butno_EPZs_ԀarepresentlyoperationalintheSouthernAfricansubregion.SouthAfrica,furthermore,isstudyingpossibilitiesforan_EPZ_Ԁstrategy.Severalcountriesinthesubregionhavebeenmanagingschemesmoreorlesssimilartothe_EPZ_Ԁstrategytoattractforeigninvestment.Botswana,LesothoandSwazilandareofferingfinancialandotherincentivestoattractinvestorsforthepurposesofgeneratingexportsandemployment.Theexperienceofthesecountrieswillbeputtouseinthisreport. h0)f Ї_ #"  "#__#" ` "#__#" "#__##__##III._0  EXPORTPROCESSINGZONESAND_LABOUR_ԀSTANDARDSINSOUTHERN \ AFRICA H""   Whilethe_EPZ_ԀlawsofMalawi,Namibia,andZimbabweintroducethestrategyassuchtoSouthernAfrica,Botswana,LesothoandSwaziland(BLScountries)havebeenrunningschemesforthepromotionofexportorientedindustrializationsincethelate1960s.Althoughtheseschemesdifferinmanyaspectsfromthe_EPZ_Ԁstrategy,theyshareacommonthemeinthattheyofferincentivesforforeigninvestment.ThestrategyfollowedinLesotho,mostnotably,hasresultedinaninvestmentpatterncloselyresemblingtheclassic_EPZ_Ԁprofile.Aswillbeseenbelow,inthecaseoftheBLSschemesaswellastheMalawi/Namibia/Zimbabweapproaches,themainobjectivesareemploymentgeneration,exportpromotion,thetransferoftechnologiesandknowhowthroughintegrationofforeigninvestorsinthelocaleconomy.Beforewebeginourdetailedexamination,wenotethattheexemptionfromnational_labour_ԀstandardsisanewdevelopmentwhichhasnotpreviouslyoccurredamongtherangeofincentivesofferedbycountriesinSouthernAfrica.̀   1. ` Lesothosforeigninvestmentstrategy:thenear_EPZ_Ԁexperience   s`h|l;+'l pW `E, <4dC s  AnexportorientedinvestmentpolicyinLesothotookshapewiththeestablishmentoftheLesothoNationalDevelopmentCorporationbylawin1967.Thesemipublicagencysobjectivesare toinitiate,promote,andfacilitatethedevelopmentofmanufacturingandprocessingindustriesandcommerceinamannercalculatedtoraisethelevelofincomeandemploymentinLesotho@ 0  10      .The_LNDC_Ԁhastraditionallyfocusedonexportorientedand_labour_Ԁintensiveprojects 4 toreducethetradeimbalanceandgeneratemuchneededjobopportunities_AX 0  11      _.In1994,48_LNDC_Ԅ    dd""assistedcompaniesemployed16,000persons.Currentestimatessetthisfigureat1820,000,orupto60%ofallprivateformalemploymentinLesotho.Theworkforceinthe_LNDC_Ԅassistedindustriesconsistsofaveryhighproportionofyoungwomen,insomefactoriesupto95%.Lesotho_labour_legislationappliesthroughoutthecountryandthuswithoutexceptionin_LNDC_Ԅassistedoperations. ""dd  TheGovernmentofLesothointhepastofferedfinancialincentivespackageswhichincludedanumberofprivilegessuchastaxholidays.Thissystemwasrevisedin1993,whenmostincentiveswerediscontinued.Atthesametimecorporatetaxwasloweredto15%whichislowforSouthernAfricanstandards.The_LNDC_Ԁstillprovidessomeloansandmodestfinancialgrants,andifsorequestedcanbecomeashareholderinnewlycreatedcompanies.Inaddition,thecountryofferstoinvestorsmarketaccesstoEuropeanandAmericanmarketsthroughpreferential (-&* agreements.The_LNDC_ԀpresentlymanagesfiveproductionzonesinLesotho.Itisresponsibleforprocessingapplicationsforinvestment,assistancetoinvestorsandthedevelopmentoftheproductionzonesandrelatedinfrastructure.Theoccupancyrateinthezonesishigh,insomezonesupto94% 0  12      . 4  _u,|;+'x p `E <4<5 u_ """"  Most_LNDC_ԄassistedinvestorscomefromSouthAfricaandtheFarEast,estimatedat45%and30%in1992,respectively.Mostareactiveintextilesandgarments,leather,andelectronicsindustry.Afterthelargestproportionofemploymentintextiles,leatherandgarmentindustriessome70%in199410%ofemploymentcanbefoundinsupportactivities.Lessthan5%ofemploymentisfoundintheelectronicssector.VirtuallyallgoodsmanufacturedinLesothoareexportedandrecentyearshaveseenadiversificationLesothosexportmarkets,withasignificantexpansionofexportsawayfromSouthAfricaandtowardsoverseasmarkets.ExportstothemarketsoftheEUandtheUSA,forexample,increasedfrom24to50%between1988and1992,whileexportstotheSouthernAfricanCustomsUniondecreasedform74to49%overthesame """"period.Preferentialaccesstooverseasexportmarketshasplayedakeyroleinthisdiversification.Manufacturingin_LNDC_Ԅassistedoperationsconstitutessome75%oftotalexports.  2.0 ` Botswanasinvestmentpolicy ,!` "` "   TheBotswanaDevelopmentCorporation(_BDC_)wascreatedin1970asaprivatecorporation,withallsharesheldbytheBotswanaGovernment.Theprimarytaskofthe_BDC_ԀistoidentifyinvestmentopportunitiesinBotswanaforexploitationbybothlocalandforeigninvestors.Theaimofthecorporationistostrivefor abetterandmoreprosperousBotswana,withpeoplewhoareemployed,skilledandhaveentrepreneurialaspirationsandopportunities,byattractingexportorientedinvestmenttogenerateemploymentandbusinessopportunities_DX 0  13      _. '0!$ TheGovernmentofBotswanathroughitsFinancialAssistance_Programme_Ԁ(_FAP_)offeredanumberoffinancialincentivestoinvestors,includingtaxholidaysandtaxexemptionsondividends.Asof1995mostoftheseincentiveshavebeenphasedoutwhilecorporatetaxisbeingsimultaneouslyloweredto15%.LikeinLesotho,the_BDC_Ԁisresponsibleforassistancetoinvestorsandthedevelopmentoftheproductionsitesandinfrastructure. <,%) Ї  Ascanbeseenbelow,thepatternofinvestmentunderthe_FAP_/_BDC_Ԁschemevariesconsiderablyfromthetraditional_EPZ_Ԁpicture,witharelativelylowshareoftextilesandgarmentsindustriesandanegligibleshareofelectronicsindustries.Thisisbecausethereisnoexportrequirementlinkedtotheprovisionofincentivesunderthe_FAP_.Asaresult,arelativelyhighproportionofgoodsmanufacturedinBotswanaunderthe_BDC_/_FAP_Ԁschemeareproducedforthedomesticmarket.Insomefirmsupto3050%ofproductionisdestinedforlocalconsumption.Inaddition,anumberofindustriessupplyproductstoAfricanmarketswhichwouldotherwisehavebeenimportedfromoverseas,resultinginanumberofindustrialactivitiesthatdonotfitthetraditional_EPZ_Ԁpicture.s`|l;+'l pv `EKB<H4@zs_s`|l;+'l py0 `EN<H4@s_ R"R"""Recentdevelopmentshowever,seemtoindicateaforthcomingchangeininvestmentpoliciesinBotswana,withanincreasedemphasisonexportorientation.ItappearsthattheGovernmentisseriouslyconsideringtheestablishmentof_EPZs_Ԁinthecountry.AreasinthenortheastofBotswana,suchas_Selibe_ԀPhikwe,areseenaspotentialzones,possiblybecausethemaintextilesandgarmentsindustriesofthecountryareconcentratedinthisarea. ""R"R"    Themainforeign_BDC_Ԁand/or_FAP_ԄassistedinvestorsinBotswanaoriginatefromSouthAfricaandtosomeextentformindustrializedcountries,whileanumberoffirmsoriginatingfromAsiacanalsobefound.Themainindustriesinwhichtheyareactivearetheengineeringandconstructionsector(35%);garment,textilesandleather(22%);foodprocessing(18%)andbeverageproductionandbottling(17%).Thenumberofpeopleemployedin_BDC_Ԅassistedoperationswasestimatedtobesome13,000insome115companies.Thisconstitutesanestimated10%oftotalformalprivateemploymentinBotswana,towhichshouldbeaddedthejobscreatedinfirmsfromwhichthe_BDC_Ԁhasdivested.The_labour_ԀlawsofBotswanafullyapplywithregardto_BDC_/_FAP_Ԅassistedoperations.̀  3. ` TheSwazilandindustrialdevelopmentstrategy  #    Themostrecentinvestment_programme_ԀwasestablishedinSwaziland.TheSwazilandIndustrialDevelopmentCompanyisaprivatedevelopmentfinancecompanysetupin1986asajointventurebetweentheGovernmentoftheKingdomofSwazilandandmajorinternationaldevelopmentfinanceinstitutions.ThecompanysaimistopromoteandtofacilitatetheeconomicdevelopmentofSwazilandbyprovidinglongtermloans,equityfinanceandfactoryspace,aswellasadvisoryservicestoinvestors._ 0  14      _ԀTheSwaziGovernmentfurthermoreofferstoinvestorsa d*#' numberofincentives,including8  *0` taxallowances,includinga5yeartaxholiday;(-&*` `  8  *0` foreignexchangeconcessions;p` `  8  *0` freerepatriationofdividends,interestsandprofits;\` `  8  *0` anexportfinanceguaranteescheme.H` `  AloweringofthecorporatetaxinSwazilandfromthecurrentrateof37.5%couldbeexpectedinthenexttwobudgetaryyears.i 0  15      ׀By1994,_SIDC_Ԅassistedprojectshadgeneratedsome8,000   newjobs,whichconstitutesapproximately10%ofprivateformalemploymentinSwaziland._  0  16      _Ԁ   Thenational_labour_Ԁlawsapplyuniformlythroughoutthecountry.0  4.0` ""SouthernAfrican_EPZs_:TheSchemesofMalawi,NamibiaandZimbabwe L ` "` " _$   `     h      p     $_  TheBLSschemesarenotfullyfledged_EPZ_Ԁschemesinthat_benefiting_Ԁenterprisesarenotinsulatedfromthedomesticeconomies.ThefirstcountryinSouthernAfricatoadoptlegislationfortheestablishmentofsegregated_EPZs_ԀwasZimbabweinNovember1994.NamibiafollowedshortlythereafterandinJuly1995,theAssemblyofMalawilikewisepassedabillon_EPZs_.Implementationofthelawsisasyetinanearlystage.  Zimbabwe    TheZimbabweExportProcessingZonesAct,1994(_ZEPZ_ԀAct)cameintoforcebypresidentialconsentin1995Ev 0  17      .ThelawprovidesfortheestablishmentoftheZimbabweExport p ProcessingZoneAuthority,whichischarged,interalia,withtheestablishmentof_EPZs_Ԁin \ Zimbabwe;theadministration,regulation,developmentandmaintenanceofthezones;theprovisionofthenecessaryservices;andtheconsiderationofapplicationsforinvestmentandtheissuanceofpermitsandlicenses.Atthetimethisreportwascompiled,theGovernmentofZimbabwewasintheprocessofconsideringnominationsfortheBoardoftheAuthority.AccordingtoSection5oftheAct,theboardmembersshallbeappointedfromamongnominationsmadebytheministriesofFinance;IndustryandCommerce;LocalGovernment,RuralandUrbanDevelopment;andanumberofbusinessinstitutions.Twoadditionalmembersshallbeselecteduponthebasisoftheirabilityandexperienceinbusiness.Itshouldbepointedoutthat,despitetheemploymentpromotionobjectiveoftheschemeandtheexpected_labour_Ԁintensityoftheenterprisestobeattracted,neithertheMinistryofPublicService,_Labour_ԀandSocialWelfare,norworkersorganizationsareincludedinthislist.  The_ZEPZ_Ԁschemeenvisagesapplicationbyenterprisesfor_EPZ_Ԁstatusthroughthegrantingofinvestmentlicenses.Thevariousfinancialincentivesarethenprovidedwiththegrantingoftheinvestmentlicense.Section25oftheActliststhecriteriathattheBoardshallhaveregardtoinconsideringapplicationsforinvestmentlicenses.Accordingtothissection,theBoardshallassessapplicationsonthebasisof x)#& Ї8  a) ` expectedemploymentgenerationanddevelopmentofhumanresources;p 8  b) ` thedegreeofexportorientation;\ 8  c) ` environmentalimpact;andH 8  d) ` likelihoodoftransferoftechnology.4  TheprecisestandardstobeappliedbytheBoardineachofthesecriteriaareyettobedeveloped.  The_ZEPZ_ԀActrequiresthat_EPZ_Ԁstatusfirmsbesegregatedfromthedomesticeconomy,eitherbylocationinageographicallysegregatedzoneorthroughasystemofbondedfactories(Sections18and20).Itdoesnotprovidefortheamountofexportedproductrequiredbylicensedinvestors.Atthetimethatthisreportwascompiled,itappearedthatthisexportrequirementwouldbesetat80%oftotalproductionforbothforeignanddomesticcompanies.Apackageoffinancialincentiveswillbeofferedtoinvestorsinthezoneswhichwillinclude8  * ` ataxholidayof5yearsanda15%corporatetaxthereafter;X  8  *0` exemptionfromwithholdingtaxesondividends,royalties,interestand D  fees; ` `  8  * ` refundofsalestaxongoodsandservices; 8  *0` exemptionfromincometaxonfringebenefitsofpersonsemployedin  _EPZs_; ` `  8  *0` dutyfreeimportationofrawmaterialsandcapitalgoods._< 0  18      _p` `    Section56ofthe_ZEPZ_ԀActstipulatesthatthe_Labour_ԀRelationsAct,1985 shallnotapplyinrelationtolicensedinvestorsoperatingandemployeesemployedinanexportprocessingzone.Theresultingsuspensionofthe_Labour_ԀRelationsActin_EPZs_ԀinZimbabwehasfarreachingconsequences.Itbarstheapplication,forexample,ofPartIIoftheActwhichdefinesthefundamentalrightsofemployeesandunfair_labour_Ԁpractices.Thisincludes8  *0` therightofanyemployeetobeamember,officerorfounderoftrade @  unions; ` `  8  *0` theprohibitionofdiscriminationinemploymentonthegroundsofrace, " tribe,placeoforigin,politicalopinion,_colour_,creedorsex; ` `  8  *0` therightofanyemployeetoafair_labour_Ԁstandards(e.g.minimumwage, #  workinghours); ` `  8  *0` therightofanyemployeetodemocracyintheworkplace(e.g.workerss %X" committees,protectionfromreprisalsbyemployers). ` `  Thesuspensionofthe_Labour_ԀRelationsActfurtherentailsthesuspensionofanumberofprovisionsregarding,interalia, x)#& 0   "" 8  *0` generalconditionsofemployment(e.g.,_minumum_Ԁage,sickleave, P+$( maternityleave) ` `  8  *0` terminationofemployment;(-&*` `  8  *0` wagesettingmechanisms;.'+` `  8  *0` workerscommittees;andp` `  8  * ` freedomofassociationandcollectivebargaining.\ Likewise,Article17ofthe_Labour_ԀRelationsAct,whichconfersregulatorypowersupontheMinisterof_Labour_,ManpowerPlanningandSocialWelfare,cannotbeappliedin_EPZs_.ThistakesawayfromtheMinisterthepowertomakespecificregulationsinthefieldof,interalia,   0  *0` ""minimumwages,socialsecurity,benefits,retirement; t` "` " 0  *8` ""hoursofwork,includingovertime; `` `  0  *8` ""leave,includingsickleave,maternityleave,andbereavementleave;L ` `  0  *8` ""specialconditionspertainingtofemale,juvenileanddisabledemployees, 8  includingtheprohibitionofchild_labour_; ` `  0  *8` ""promotionofemploymentofdisabledpersons;and ` `  0  *8` ""terminationofemployment.l ` `  _EPZs_Ԁwillfurthermorebeoutsidethejurisdictionofthe_Labour_ԀRelationsBoardandthe_Labour_RelationsTribunal.  TheExportProcessingZonesAuthority may,inconsultationwiththeMinisterresponsiblefortheadministrationofthe_Labour_ԀRelationsAct,1985,providerulesforconditionsofservice,terminationofservice,dismissalfromserviceanddisciplinaryproceedingthatapplyinexportprocessingzones._ 0  19      _ \   Namibia 4 ̀  InNamibia,the1995ExportProcessingZonesAct(_NEPZ_ԀAct)providesforthecreation |  of_EPZs_Ԁinthecountry.Section3oftheActsetsforththeobjectivesofthe_EPZ_ԀstrategyinNamibia:8  a) ` toattract,promoteorincreasethemanufactureofexportgoods;,! 8  b) ` tocreateorincreaseindustrialemployment;" 8  c) ` tocreateorexpandexportearnings;# 8  d)0`    ` tocreateorexpandindustrialinvestment,includingforeigninvestment; #  and ` `  8  e)0`    ` toencouragetechnologytransferandthedevelopmentofmanagementand %X" _labour_Ԁskills. ` `  TheregimeinNamibiaprovidesbothforlocationofenterpriseswithin_EPZs_,andthesingle_EPZ_enterprise.EachzoneistobeadministeredbyanExportProcessingZoneManagementCompany,whichisresponsibleforthemanagementandinfrastructuraldevelopmentofthezone.Italsoisresponsible,inconsultationwiththegovernment,fortheissuanceof_EPZ_ԀEnterpriseCertificatestoinvestorsinthezones.Overallmanagement,liaisonwiththegovernment,marketingandpromotion,anddevelopmentofthezonesisinthehandsoftheOffshoreDevelopmentCompanyestablishedbytheAct.Single_EPZ_Ԁenterprisesareadministereddirectlybythislattercompany. .'+ Ї  Underthelaw,anyfirmcancomeforwardandapplyforan_EPZ_ԀEnterpriseCertificatewhichisgrantedbytheOffshoreDevelopmentCompanyoranExportProcessingZoneManagementCompanyinconsultationwiththeMinistersofTradeandIndustryandofFinance,aswellastheBankofNamibia._EPZ_Ԁenterprisesenjoyfreedomoflocation,eitherindesignatedindustrialparksorasasinglefactory_EPZ_.Issuanceofacertificatecanberefusedforanumberofreasons,mostnotablyinrespectofanenterprise8  XX~2 whichshallnotmakeinvestmentsintheexportprocessingzonewhichshallresultinthe  t creationofemploymentorexportearnings;  8  (....)  8  whichdoesnotordoesnothavetheintentiontoconductthebusinessofmanufacturing,exportingorimportingintheexportprocessingconcerned...#X~2X1#_C 0  20      _.$     ""PartIIIoftheBillprovidesfortheexemptionofthezonesfromvarioustaxlaws._q`|l9)%l 0 `Em< 4 l q_ԀSection8_provid_esthatthe_Labour_Act,1992 shallnotapplyinanexportprocessingzone.Inordertofilltheregulatoryvacuumwhichresults,theMinisterofTradeandIndustry,inconsultationwiththeMinisterof_Labour_andHumanResourcesDevelopment,may makeregulationsregarding(a)basicconditionsofemployment;(b)theterminationofacontractofemployment;(c)disciplinaryactions;(d)health;(e)safety;and(f)welfare._XX 0  21      _ԀThislistappearstobe h  ""  exhaustiveandthuswouldnotconferupontheMinistertheauthoritytomakeregulationsregarding,interalia,freedomofassociationandcollectivebargainingrights. @!   Thesuspensionofthe1992_Labour_ԀActin_EPZs_Ԁremovesprotectionforworkersinanumberofareas.Mostnotably,itsuspendstheapplicationofprovisionsregarding0  *0` ""conditionsofemployment(e.g.,workinghours,overwork,nightwork,sickleave, %l# maternityleave,child_labour_,prohibitionofvictimizationandprotectionoffreedomofassociation); ` "` " 0  * ` wagecalculationandwagesettingmechanisms;(0"&"" 0  * ` freedomofassociationandcollectivebargaining;)#'"" 8  *0` theregimecoveringcollectiveagreements;x*$(` `  0  *0` ""terminationofemployment;d+$)` "` " 0  *0` ""occupationalsafetyandhealth;P,%*` "` " 8  *0` provisionrelatingtosanctionsandoffences,inparticularforced_labour_.<-&+` `  ЇTheprovisionscoveringaffirmativeactionandcomplaintsinrelationtounfairdiscriminationorharassmentlikewisewillnotapply.Inaddition,theemployeesandenterprisesinthezoneswillbeoutsideofthejurisdictionoftheNamibian_labour_Ԁcourtsystemandtheprovisionsregarding_labour_Ԁinspectiondonotapply.Theconsequencesofthenonapplianceofthe1992_Labour_ԀActarefarreachingandshouldnotbeunderestimated.Forexample,theprovisionsthatprohibitchild_labour__B 0  22      _ԀandprotecttheconstitutionalrightoffreedomofassociationL| 0  23      ׀nolongerapply.     Theintendedcreationofan_EPZ_ԀinWalvisBaydeservesspecialattentioninthiscontext.NamibiasmainportfacilitiesarelocatedinWalvisBay,aswellasalargepartofitsexistingindustries.InviewoftheanticipatedforeigninvestmentintoNamibiathatisexpectedtocongregateinthisarea,alargepartoftheeconomicallyactivepopulationcanbeexpectedtofindemploymentinthis_EPZ_.Ifemploymentinother_EPZs_Ԁisaddedtothis,theresultmaywellbethatalargenumberofformallyemployedNamibianswillbeexcludedfromthenational_labour_legislation.  Atthetimehisreportwaswritten,theNationalAssemblyofNamibiawasconsideringanamendmentofthe_NEPZ_ԀAct.TheamendmentproposesthechangingofSection8totheeffectthatthe1992_Labour_ԀActwillapplyinNamibian_EPZ_.Theproposedamendmentfurtherforesees  abanonstrikesandlockoutsin_EPZ_,prescribingcompulsoryarbitrationincasesofserious_labour_Ԁconflict.U  0  24      ׀Whiletheapplicationofthe_Labour_ԀActinitselfisanimportantdevelopment,  theproposedbanonstrikesandlockoutsin_EPZs_ԀislikelytoraisequestionsinthelightofinternationalstandardsratifiedbyNamibia.  Malawi 4   InJuly1995,theParliamentofMalawiadoptedtheExportProcessingZonesAct,1995(_MEPZ_ԀAct).Theobjectivesof_EPZs_ԀinMalawiarenotexpresslystated,butcanbededucedfromthecriteriaforthegrantingofinvestmentslicenses(seebelow):8  * ` employmentgeneration;,! 8  * ` transferoftechnologies;" 0   8""* ` exportorientation;and#"" 8  * ` theutilizationofthecountrysnaturalresources.#    TheActestablishesanExportProcessingZonesAppraisalCommitteewhichwillreview applications[ofanyenterprise]fortheestablishmentandoperationofexportprocessingzonesandtheproductionofexportproducts,andmakingappropriaterecommendationstotheMinister_F 0  25      _Ԁ[forCommerceandIndustry].TheMinisterisempoweredtodeclareanyareaor ("% factoryasan_EPZ_Ԁandisresponsiblefortheissuanceofexportenterprisecertificates.TheAct x)#& doesnotcontainprovisionswithregardtoproductiondevelopmentandmanagement,anditispresumedthattheseresponsibilitiesarelefttotheprivatesector.Accordingtoarticle8ofthe_MEPZ_ԀAct,_EPZ_Ԁcanbecreatedbothassegregatedproductionzonesorasindividualbondedfactories.  Inappraisingapplicationsfor_EPZ_Ԁstatus,theCommitteemusttakeintoaccount:     (a)0 `   ` _labour_Ԁintensiveactivitiesoftheprojectanditspropensitytocontributeto  t employment; ` "` "   (b) ` useofadvancedtechnology; L    (c) ` utilizationoflocalrawmaterials; 8    (d)0 `   ` exportorientedactivitiesotherthantheproductionforexportoftobacco,tea, $  coffee,andsugar; ` "` "   (e)0 ` theavailabilityofsufficientwarehousesforstorageofrawmaterialsandexport l  products; ` "` " 0  (f)0` ""documentaryevidenceofexportmarketsfortheexportproductsHX 0  26      .D ` "` "   Exportenterprisesinthe_EPZ_ԄsystemofMalawiwillbeexemptedfromthedutiesleviedonimportedorpurchasedmaterials.TheActdoesnotprovidefurtherindicationsastothesortofincentivesofferedtopotentialinvestors.LikeZimbabwe,thecountryislandlockedandinalllikelihoodwillrelyontheproductionof highvalue/lowvolumeproducts.The_MEPZ_ԀActdoesnotrestrictorsuspendtheapplicationof_labour_Ԁstandardsin_EPZs_.  \ W 0   IV.0""APPLICATIONOFINTERNATIONAL_LABOUR_ԀSTANDARDSINEXPORT h PROCESSINGZONES T""   TheILOsCommitteeofExpertsontheApplicationofStandardsandRecommendations(_COE_)hasinanumberofcasesaddressedtheissueof_labour_Ԁstandardsin_EPZs_.Mostofthecasesinquestionrelatedtofreedomofassociationandcollectivebargaining,whicharecoveredbytheILOsFreedomofAssociationandtheRighttoOrganizeConvention,1948(No.87)andtheRighttoOrganizeandCollectiveBargainingConvention,1949(No.98)(seeBox,below).TheCommitteescommentshaveconsistentlydisapprovedofrestrictionsonfundamental_labour_standardsin_EPZs_,forexampleinits1994GeneralSurveyonFreedomofAssociationandCollectiveBargaining.TheCommitteesaid,inconnectionwiththebanningoftherighttostrikeinthe_EPZs_Ԁofsomecountries:8  XX~2SuchaprohibitionisincompatiblewiththeConvention[No.87],whichprovidesthatall d*#' workers,withoutdistinctionwhatsoever,shallhavetherighttoestablishorganizationsoftheir ,+$( ownchoosingandthatsuchorganizationsshallhavetherighttoorganizetheiractivitiesandtoformulatetheir_programmes_#X~2XZ#._b| 0  27      _,L&* ЇAswillbeseenbelow,thisstancebytheCommitteealsoencompassesstandardsotherthanassociationalrights.TheGoverningBodyoftheILOstatedthat [_w]here_Ԁgovernmentsofhostcountriesofferspecialincentivestoattractforeigninvestment,theseincentivesshouldnotincludeanylimitationoftheworkersfreedomofassociationortherightto_organise_Ԁandbargaincollectively.f 0  28      ׀TheGoverningBodysCommitteeofFreedomofAssociation,furthermore,in   acasebroughtbytradeunionsagainstPakistan,endorsedthe_COE_s insistenceontheimportanceofworkersinexportprocessingzonesdespitetheeconomicargumentsoftenputforwardlikeotherworkerswithoutdistinctionwhatsoever,enjoyingthetradeunionrightsprovideforbythefreedomofassociationConventions.~  0  29        `   IntermsofsimilaritytoNamibiaandZimbabwe,Bangladeshisacaseinpoint.BangladeshoperatestheExportProcessingZonesAuthorityAct,1980,Section11AofwhichenablestheGovernmenttoexcludethezonesfromtheoperationofallorpartofthecountrysindustrialrelationsregulations.DuringitsconsiderationofthecountrysreportunderConventionNo.87,the_COE_ԀobservedthatXX~28  thisprovisionisnotcompatiblewiththeguaranteesprovidedbyArticles2and3ofthe 0 Conventionand,inparticular,withtherightofallworkerswithoutdistinctionwhatsoevertoestablishandjoin_organisations_Ԁoftheirownchoosing,anditurgestheGovernmenttoamendSection11Aofthe1980Actsoastobringitintoconformitywiththerequirementsoftheconvention.#X~2X c# 0  30      P Subsequently,theGovernmentnotifiedtheILOthatithaddecidedtoreviewtheprovisioninquestion 0  31      .Inasimilarcaseinvolving_EPZ_ԀPakistanilegislationwhichdeniedtherighttoorganize  toworkersin_EPZs_,the_COE_Ԁtooktheviewthat theserestrictionsareincompatiblewithConventionNo.87whichshouldapplytothesezonesasitdoestootherpartsofthecountry. 0  32       |   Theabovecases,aswellasthe_COE_scommentsinanumberofothers,illustratetheincompatibilityofrestrictionson_labour_Ԁnormsin_EPZs_Ԁwithinternational_labour_Ԁstandards.Inaddition,theyillustratethe_COE_spositionthatconventionsshouldapplyinthesamemannerinallpartsofthecountry.Suspending_labour_Ԁstandardsin_EPZs_Ԁwhilesettingnewnormsforthezoneswouldthusstillbelikelytoraisequestionsastoacountrysresponsibilitiesingivingeffecttointernational_labour_Ԁstandards.  NamibiaandZimbabwehaveratifiedanumberofinternational_labour_Ԁstandards.Thecurrentpositionoftheir_EPZ_Ԁlegislation,inlightofthepositiontakenbytheCommitteeofExperts,posesproblemsintheapplicationofsomeofthosestandards. ' $ W W X W    Zimbabwehasratifiedthefollowingconventions:8  *0` WeeklyRest(Industry)Convention,1921(No.14);4 ` `  8  *0` EqualityofTreatment(AccidentCompensation)Convention,1925(No.   19); ` `  8  *0` MinimumWageFixingMachineryConvention,1928(No.26); ` `  8  *0` UndergroundWork(Women)Convention,1935(No.45); t` `  8  *0` _Labour_ԀInspectionConvention,1947(No.81); `` `  8  *0` MinimumWageFixingMachinery(Agriculture)Convention,1951(No. L  99); ` `  8  *0` Equal_Renumeration_ԀConvention,1951(No.100);$ ` `  8  *0` _Labour_ԀInspection(Agriculture)Convention,1969(No.129); ` `  8  *0` TripartiteConsultation(International_Labour_ԀStandards)Convention, l  1976(No.144). ` `     ""Aswasnotedabove,thesuspensionofthe1985_Labour_ԀRelationsActinZimbabwean_EPZs_Ԁremovesguaranteesasregardsthepreventionofdiscrimination,complicatingtherealizationoftheprincipleofequalpayforworkofequalvaluesetforthbyConventionNo.100.ThesuspensionalsoimpairstheapplicationoftheILOsinstrumentspertainingto_labour_Ԁinspection,ConventionsNo.81and129.Theexclusionof_EPZs_ԀfromtheregularwagesettingmechanismsmaywellhaveimplicationsforZimbabwesresponsibilitiesunderConventionsNo.26and99._q`|l9 )%l 0 `E1<T 4L 0 q_While ""  ZimbabwehasnotratifiedtheILOsinstrumentsprotectingfreedomofassociationandtherighttocollectivebargaining,ConventionsNo.97and98,theprinciplesoffreedomofassociationandcollectivebargainingareapplicabletoallthememberStatesoftheILO,irrespectiveofwhethertheyhaveratifiedtherelevantconventions(seebox).ZimbabwesratificationofConventionNo.144,whichisfoundedupontheprinciplesoffreedomofassociationandcollectivebargaining,furtherillustratesthecountrysdedicationtotheseprinciples.  NamibiaratifiedConventionsNos87,98and144in1995.Itisironicthatthisexpressionofthecountryscommitmentto_tripartism_Ԁandupholdingassociationalrightswasmadearoundthesametimethatrestrictionsontheseprinciplesinthe_EPZ_ԀActwerebeingpassed.Aswasnotedbefore,theproposedamendmentofSection8ofthe_NEPZ_ԀActmaycomealongwayinremedyingthissituation.The_COE_ԀmayraisequestionsconcerningtheapplicationofConventionsNos.87and98iftheproposedbanonstrikesandlockoutsisapprovedbytheNationalAssembly.  Asthe_EPZ_ԀlawsinNamibiaandZimbabweattributeregulatorypowerstogovernmentalinstitutions,whichmaygoalongwayinremedyingthegapsleftbythesuspensionofthe_labour_laws,itisatthispointnotpossibletomakeansubstantiveassessmentastotheactualimpactof 0h*. thissuspension.Inneithercountry,however,dotheseregulatorypowersincludeamandatetoprovideregulationstoguaranteetherighttofreedomofassociationandcollectivebargaining.  OthercountriesinthesubregionwhichhaveratifiedILOstandardsandareconsidering_EPZ_Ԁpoliciesgoinginthedirectionof_labour_Ԁlawsuppressionarelikelytofacesimilarproblemsformeetinginternationalobligations.Inparticular,suchproblemsmayariseinrespectoftheILOsfundamentalconventionspertainingtoassociationalrights(No.87and98),discrimination(No.100and111),forced_labour_Ԁ(No.29and105),andchild_labour_Ԁ(No.138).  t `Z|lL <8~x_n p @Ea+Yd(),  ""                                               /|)-  V.0  _LABOUR_ԀSTANDARDSANDFOREIGNINVESTMENT\""    ExperienceinBotswana,LesothoandSwaziland,whiledifferentfromproper_EPZs_,ishighlyinformativeastherehasbeenbothinvestmentandemploymentcreation,whilenoconcessionsweremadeinthefieldof_labour_Ԁstandards.Intermsofemploymentgeneration,thesharesintotalprivateformalemployment,60%inLesothoand10%inBotswanaandSwaziland,wouldbyglobalstandardsrankthethreecountriesamongreasonablysuccessful_EPZ_Ԁhostcountries.ThebetterperformanceofLesothointhisregardcanbeattributedtotheconsiderablepresenceof_labour_Ԁintensivetextilesandgarmentsindustriesandtherelativelysmallsizeofitstotal_labour_Ԁforce.Furthermore,theexportshareofmanufacturersundertheinvestmentscheme,75%inLesothoforexample,indicatethattheinvestmentschemesoftheBLScountriescancontributeimportantlytobringingaboutamoreexportorientedenvironment.  Since_labour_ԀstandardsarefullyappliedintheBLScountries,thefollowingquestionshouldbeasked:doesthediminutionof_labour_Ԁstandardsleadtolargerinvestmentinflowsin D  _EPZs_?InviewofthefactthatsomedevelopmentscanbediscernedinSouthernAfricatowards 0 thereductionorsuspensionof_labour_Ԁstandardsin_EPZs_,thenextquestiontobeaddressedis:whatwillbetheeffectsoftheremovalorreductionof_labour_ԀstandardsinSouthernAfrican  _EPZs_?     1. ` _Labour_Ԁstandardsandinvestmentinflows  \   Sofar,veryfewattemptshavebeenmadetoevaluatehow_labour_Ԁlawsareperceivedbyforeigninvestorsandhowtheyaffectchoicesoflocationstoinvest.ArecentsurveyofforeigninvestorsinEasternAfricamighthelptopartiallyfillthisgap.ThesurveywasconductedfortheWorldBankinfiveEastAfricancountriesin1994.Itcovered150currentandpotentialinvestorsfromEurope,AsiaandSouthAfricawhowerealreadyactiveorhadshowntheirconcreteinterestinoperatinginEasternAfrica.Theirinvestmentprojectshadasignificant,albeitnotprevalent,exportorientation(about60percent,ofwhich17percenttotheAfricanmarket)._g 0  33      _Ԁ ,!   "Fundamentals"ratherthan incentiveswereindicatedbytherespondentsasthemainreasonfortheirinvestmentdecisions.Hostcountryincentiveswererankedashavingthesameimportanceasfactorssuchaslongestablishedpersonalrelations,previoustraderelationsand_favourable_Ԁinformation.I  0  34      ׀ThefindingsalsoconfirmedthatAfrica,EasternAfricaatleast,isnot %X" intheshortlistofinvestmentthatis footloose.Themajorityofthefirmssurveyedspotteda_locationally_Ԁspecificopportunityforinvestmentbutdidnotconsideralternativelocationspriorto makingtheirinvestmentdecision.Thosewhodid,consideredalternativesitesintheregion(40 ("% percent),withonlyaverysmallproportion(4percent)consideringalternativelocationsinEuropeorAsia.   Bothcurrentandpotentialforeigninvestorswereparticularlysensitivetoabroadrangeofoperationalconstraintstotheexpansionoftheiractivity.Ofthetwelvecategoriesofdeterrentsidentifiedinthesurvey,therespondentsindicatedpoliticalandpolicyriskasthemostseriousone,followedbypoorbasicinfrastructure(seeTable5.1).Anumberofconcernspertainingmainlytoregulationsonforeignexchange,_remittability_Ԁofprofits,financingandtradefollowednext.Ingeneral,potentialinvestorsregardedgovernmentregulationsasanareaofmajorconcern,whilecurrentinvestorsweremuchmoreappreciativeofrecentreforms.Thissuggeststhatan imageproblemremainsasthelegacyofpervasiveformsofregulationsonpricesand_labour_Ԁmarketsthattraditionallycharacterizedthebusinessenvironmentintheregion.  Problemsrelatedtothecostand/orqualityof_labour_Ԁwererankedamonglowrangeconstraints.Morespecifically,themostseriousconcernsconcerning_labour_Ԁwerethelackofmiddlemanagementandtechnicians,andthelackofskilledworkers.Regulationsconcerningexpatriatepersonnelwereperceivedasamidrangehandicap.Other_labour_Ԁregulations,tradeunionsand_labour_Ԁcostswereperceivedasmoderatetominorconstraints(seeTable5.2).Inshort,itwasnotthecostof_labour_Ԁbutratheritsproductivityandthelevelofskillsthatseemedtomatterthemosttothesurveyedfirms.  AsimilarpictureemergedfromastudyontheopportunitiesforthedevelopmentofanexportorientedgarmentindustryinAfrica.Thestudysuggestedthatthemajorareasofconcernforforeigninvestorsincluded_labour_Ԁmarketregulations,import/exportregulation,theexchangerateregime,thesecurityofinvestment,thelevelofinfrastructure,andthemanagingofquotas.Thecostof_labour_Ԁwasnotlistedasaconcern.Theconstraintsderivingfrom_labour_Ԁregulations,moreover,werelessstringentinanumberofcountriesthathadrecentlyundertakenreforms,e.g.Ghana,KenyaandZimbabwe._J 0  35      _Ԁ T   ThesefindingssupporttheresultsofinterviewsbytheILOamongsomeforeigninvestorsinLesothoandBotswanaaboutthelowrankingof_labour_Ԅrelatedissuesamongthefactorsthatforeigninvestorsconsiderimportantintheirlocationdecisions._K  0  36      _ԀThoseinterviewedindicated # that_labour_Ԁstandardsdidnotfigureprominentlyamongtheconsiderationsthatledtodecisionstoinvest.Factorsconsideredtobemoreimportantwere:  *0 ` preferentialaccesstoforeignmarkets;&D #` "` " 0  * ` freeforeignexchange;'0!$"" 0  *0` ""politicalstability;("%` "` " 0  * ` dutyfreeimportationofrawmaterials;x)#&"" 0  *0` ""financialincentives;d*#'` "` " 0  * ` good_infrastructural_Ԁfacilities;p"" 0  *0` ""a_favourable_Ԁproductivity/_labour_Ԁcostratio.\` "` " IntheparticularcaseofBotswana,accesstothedomesticmarketwasalsoanimportantconsiderationtosomeinvestors.Whiletheabovefindingsarebaseduponalimitednumberofinterviews,theyseemtobecorroboratedbyothersurveysandreportswhichrank_labour_Ԁcostsand_labour_Ԁissuesamongthelessimportantfactorsinfluencinginvestment._G 0  37      _ԀThe_Organisation_   forEconomicCooperationandDevelopment,forexample,recentlystatedthatthe [_a]vailable_evidenceseemstoimplythe_FDI_Ԁ[foreigndirectinvestment]locationdoesnotdependtoanimportantdegreeonanactivegovernmentroleinshapingcore_labour_Ԁstandards....thereislimitedevidencethatinvestorsaredisproportionatelyattractedtoareaswhereunionsareweak._>   0  38      _ 8    While_labour_ԀstandardsfullyapplyinBotswana,LesothoandSwaziland,therehavebeenpracticalproblemsinthemanagementofhumanresourceswhichhaveleadto_labour_Ԁdisputes.Theremovalofprocedurestoresolve_labour_Ԁdisputesisnotlikelytoimprovethissituation.Indeed,intheSouthernAfricansettingitmaybethecauseofincreasedfrictionbetweenworkersandemployers.InLesotho,forexample,itwasassertedthatrecent_labour_Ԁunrestwastosomeextentaresultofthefactthattradeunionswerebothinsufficientlyrecognizedbyemployersandinadequatelyorganized.Itwasfeltbyemployersandworkersorganizations,aswellasgovernmentofficials,thatlimitingthe_labour_Ԁmovementsrepresentationalfunctionbybanningitinselectedsectorssuchas_EPZs_,orbyremovingitsaccesstoworkersinthosesectorswouldprobablyfurtherworsentheindustrialrelationsclimateandleadtoworkdisruption.  Insum,experienceandempiricalevidenceappeartounderscoretherelativelyminorinfluenceof_labour_ԀstandardsonexportorientedforeigninvestmentinSouthernAfrica.Atthesametime,investorsconsider_labour_Ԁissuessuchastradeunionrepresentationusefulasachannelfornegotiationanddisputeresolution. h TRW6&A4W6&6&A46&A4T_uTYJ :6p|0_!$` EnN_Q+_!$!$#+ _  " """ /(, " " _unJ:6p|0]# ` Ea )# PH# _ """" """"  2.0 ` Theeffectsofremovingorreducing_labour_Ԁstandardsin_EPZs_d*#'` "` "    Governmentsinthesubregionmayfeelthataremovalof_labour_Ԁstandardsisneededtoenticefirmstostartoperationsinanew_EPZ_Ԁenvironmentandcompensateforotherlocaldisadvantages.Investorscanindeedbeluredbytheopportunitytomakeextraprofitsbymeansofoperatinginasiteinwhich_labour_Ԁstandardsarenotrespected.Asamatteroffact,however,relativelyhighandgrowingwagesandasoundindustrialrelationssystemhavenothamperedthegrowthofthefew_EPZ_ԀschemesthathavebeensuccessfulinAfricasofar.Acomplexsetof 0h*. factors,infact,governfirmsdecisionsastowheretolocatetheirforeigninvestments.Someadmittedlyscantevidenceisavailabletoshowthat,onthewhole,foreigninvestorsinAfricaarenotprimarilysensitivetolow_labour_Ԁcostsandderegulated_labour_Ԁmarkets.Rather,theyseemmainlyconcernedbythelackofmanagersandskilledworkers,andbyspecificconstraintssuchasthoseplacedonexpatriatestaff.  Asarguedbefore,therearealreadysufficientspecificreasonsforfirmsfromoutsideandwithinthesubregiontoinvestandlocatesomeexportorientedoperationsinSouthernAfrica.Butthereappearstobesomeupperlimitinthetotalvolumeofforeigninvestmentthatislikelytoultimatelyaccruetothenewlyestablished_EPZs_.Compromisesinthefieldof_labour_Ԁstandardsmightcapturesomemarginaladditionalinvestmenttothebenefitofagivenlocation,butwouldnotresultinamuchhigherflowofinvestmentintothesubregion.Theywouldgrantextraprofitsto_EPZ_Ԁinvestors,includingthosethatwouldhaveinvestedwithouttheperspectiveoflowerorno_labour_Ԁstandards.Butsince_EPZ_Ԁinvestmentisgenerallyhighlyvolatile,suchapremiumisnotaguaranteeforfurtherinvestmentandemployment.Thebenefitsintermsofnewlycreatedjobscouldbeshortlived,buttheimplicationsforthewelfareofworkersandthepatternof_labour_relationsinthehosteconomywouldlastlong.  Likewise,ithasbeenarguedthattheremovalorreductionof_labour_Ԁstandardscouldberelieduponasawaytobuildupsignificantcomparativeadvantage.Theinternational_uncompetitiveness_ԀofcountriesinthewholeofAfricaisaffectedbygeographicaldisadvantagesandagenerallypoorpolicyandinfrastructureenvironment,whichcreateconditions_unfavourable_totheinternationaloperationsoffirms.Majorreductionsinthecostandrigidityof_labour_ԀwouldberequiredtocompensateforthestructuraldisadvantagesofSouthernAfricarelativetootherregions.Thescopeforsuchreductionsisquitelimited.Moreover,wagesinthesubregionarealreadycomparablewiththoseofmostlocationscompetingfor_EPZ_Ԁinvestmentindifferentpartsoftheworld,i.e.theyareclosetotheinternationallycompetitivelevelofwagesforthiskindofinvestment.UnderthepressureofcountriessuchasChinaandVietnam,thathaveanalmostunlimitedsupplyofunskilledworkersmigratingfromtheruralsectortoworkin_EPZ_Ԁfirms,thislevelisverylow.Itmightapproximatethepointatwhich,takingintoaccountthemotivationandnutritionaleffectsofpay,substantivereductionscouldactuallyresultinhighercostsbecauseofreducedproductivity.  Downwardpressuresonwagesarejustoneaspectoftheeconomicimplicationsoftheremovalof_labour_Ԁstandards.Otheraspectsconcerntheproductivitythatawelltrainedandwellmotivatedworkforcecandeliver.Removing_labour_Ԁstandardsmightreducetheincentiveforforeignandlocal_EPZ_Ԁfirmstoinvestinthedevelopmentandbettermanagementoftheirhumanresourcesandtocompetebyincreasingefficiency.Byrestrainingfreedomofassociation,suchremovalalsoinhibitsthepositivecontributionofworkersandworkersorganizationstohelpingraiseworkplaceproductivityandqualityofoutput.Emphasisonefficiencyisparticularlyimportantinordertosustainthecompetitivepositionof_EPZ_Ԁfirmsandallowthemtomoveupmarket.Forinstance,recenttrendssuchastheadoptionof leanretailing"systems(zeroornostocks)bylargeretailersofconsumergoodsinindustrialcountriesareconferringadefiniteadvantagetothose_EPZ_Ԁlocationsthatcangrantreliablequality,effectivecoordination,andfastdelivery.Atpresent,thisisprobablyprematurefor_EPZ_ԀfirmsinSouthernAfrica,butthe_labour_standardspremisesforastrategybasedonthedevelopmentof competitiveadvantagesin_EPZ_productionshouldbeinplacefromthestart. 0h*. Ї  Theremovalorreductionof_labour_ԀstandardsisalsolikelytohavenegativeimplicationsfortheothermajorcomparativeadvantageofSouthernAfricanasasitefor_labour_Ԅintensiveactivities:unrestrictedpreferentialaccesstomarketsinindustrialcountries.ThecurrentsystemofquotasandtariffsoninternationallytradedgoodsisgoingtobephasedoutinthepostUruguayRoundera.Theactualimplementationofthenewsystem,however,willbeamatteroflengthynegotiations,coupledwithsomemeasurestosafeguardexportsfromtheleastdevelopedcountries.Preferentialaccesstomajormarketswillmaintainaconsiderableimportanceforlessdevelopedcountriesforsometime.  Giventheattimesdramaticeffectson_labour_Ԁmarketsinimportingcountriesandthepoorreputationof_EPZs_Ԁasconcernsthecircumstancesunderwhichproductioniscarriedout,_EPZ_firmsareunderthescrutinyoftheinternationalcommunity.Overtviolationsofnationalandinternationalstandards,notuncommoninanunregulated_EPZ_Ԁ_labour_Ԁenvironment,attracttheattentionofinternationalagencies,tradeunions,consumergroups,etc.TheymightreducethechancesofSouthernAfricancountriestobargainforprivilegedaccesstomarketsinindustrialcountries.SomegovernmentsbenefittingfromtheUnitedStates_GSP_Ԁscheme,forinstance,havealreadybeenfacedwiththethreatoractualsuspensionofpreferencesfollowingviolationsof_labour_Ԁstandards.Initsnew_GSP_ԀScheme,theEuropeanUnionisenvisagingthepossibilitytograntadditionalpreferencestobeneficiariesthatapplyILOConventionsNos.87,98and138.Concernfortheapplicationof_labour_Ԁstandardsalsoappliestoprivatebusiness.Agrowingnumberofhighprofiletransnationalcompaniesin_labour_Ԅintensiveindustrieshaveadoptedguidelinesorcodesofconductthatconditionthechoiceofsubcontractorsandlocalpartnersinjointventurestorespectforbasicstandards(e.g.LeviStrauss,_J.C._ԀPenney,Reebok,_IKEA_).Inanumberofcases,openviolationofstandardsconcerningchild_labour_Ԁorforced_labour_Ԁhasinducedmajorcompaniestowithdrawfromtheiroperationsingivencountries,withconsiderableexportlossesfortheselatter. 0  39       |    Finally,theissueof_labour_Ԁstandardsinthe_EPZs_Ԁshouldbeseenfroma_subregional_perspective.Thereisthepossibilityofanincentivewarasaconsequenceofthesimultaneousintroductionof_EPZs_.Ifextensiveconcessionsinthesocialand_labour_Ԁfieldsareanintegralpartoftheincentivepackageofferedto_EPZ_Ԁinvestorsinagivencountry,theconsequenceswouldbefoundinthose_neighbouring_Ԁcountriescompetingforthesamekindofinvestment.Itwouldbemoredifficultforthem,forinstance,toresistinvestorspressuresforthegrantingofsimilarconcessions.Thenotionofan unfaircompetitionfor_FDI_Ԁcouldpenetratethepolicydebateinthesubregion,generatingfrictionsintherelationshipsbetweencountries.Theimplicationcouldbetheweakeningoftheprocesstowardsgreatercooperationandeconomicintegrationatthe_subregional_Ԁlevel,avitalelementfortheexpansionofsustainableinvestment,tradeanddevelopmentforallofSouthernAfricainthelongterm. !  P+$( !VI.0  EXPORTPROCESSINGZONESANDECONOMICGROWTH:THE p OUTLOOKFORSOUTHERNAFRICA ""    InSouthernAfrica,significantopportunitiesforinternationalinvestmentstemfromlocationadvantagessuchasabundantnaturalresources,thevarietyoftouristattractions,thewidespreadknowledgeofEnglish,lowcost_labour_Ԁandpreferentialaccesstomarketsinindustrialcountries.Measuredinhourlyratesatprevailingexchangerates,African_labour_ԀisascheapasinmostlocationsinAsia,andgenerallycheaperthaninthosecountriesofCentralAmericathatarerecentlyexperiencingamassivewaveof_EPZ_Ԁinvestment(seeTable5.3).Paradoxically,thosecountriesofAfricathathavethemostsuccessful_EPZs_Ԁarealsothosewiththehighesthourlywagecosts(e.g.MauritiusandTunisia).Foreigninvestors,infact,arenotattractedbylow_labour_Ԁcosts"perse",butbyconvenientaccesstofinalmarketsandlowunit_labour_Ԁcosts(nominalwages/_labour_Ԁproductivity).Differencesinthelevelofwagesacrosslocationscompetingforforeigninvestmentareoffsetbydifferencesintheproductivityofworkers.Forexportorientedinvestment,otherfactorscomprisingthetotalunitcostsofproductionalsoplayarole,e.g.thetransactionandtransportationcostsinvolvedinorganizingcrossborderproductionnetworksandthetimelydeliveryofoutputtoitsfinaldestination.Theinterestofforeigninvestorsisalsobeingfueledbyanumberofrecentdevelopments.Somecountriesareslowlybeginningtoreapsomebenefitfrompast,painfulmacrolevelreformsandtheliberalizationoftheirtradeand_FDI_Ԁregimes.Thepoliticalsituationinthesubregionisonthewholemorestable.SouthAfricaanditslargeeconomyhaverejoinedtheinternationalcommunity.  IndiscussingtheinternationalcompetitivenessoflocationsinSouthernAfrica,itisusefultodistinguishbetweentwogroupsofinvestors:international footlooseinvestorsandinvestorswhohavespecificmotivestoestablishaffiliatesandcrossborderproductiontieswithlocationsinthesubregion. 0  1.0` ""International footlooseinvestmentT` "` "    Asthefirstgroupofinvestorsisconcerned,therearesignsoftheirgrowinginterestinsupplyingindustrializedcountriessmarketsforsimplemanufacturingconsumergoodsfromexportplatformsinAfrica.AsshownbytheexperienceofLesotho,thetrendisalreadyvisibleinthemosttypical_EPZ_Ԁindustry,textilesandgarment.  TwomainsourcesoflocationadvantagecoulddriveawaveoffootlooseinvestmentintoSouthernAfricancountries.Thefirstislow_labour_Ԁcostsandreasonablylowunit_labour_Ԁcostsforsomekindofproducts,e.g.garments.Themanufacturingofstandardizedclothingisa_labour_Ԅintensiveactivity,forwhichtheenvironmentalobstaclesthataccountforhighunit_labour_Ԁcostsandmakeexportorientedinvestmentinadevelopingcountryuncompetitivearerelativelylesssignificant.Highlevelsofskillsarenotrequiredlocally,sincedesign,marketingandother sophisticatedactivitiesaretakencareofelsewhere.Theweightandvolumeofthemajorinputfabricsandoutputgarmentsaccountforanegligibleshareoftransportationcostsintotalcosts.EstimatesareavailabletoshowthatselectedlocationsinAfrica,includinginSouthernAfrica,cancompeteontheinternationalmarketforclothingonaparwithothersitesinAsia(seeTable5.4).Inprinciple,thisnewlyfoundcompetitivenessofAfricainmanufacturingbasicgarmentitemsforexportshouldalsobefoundforsimilarsimple,standardizedandgloballytradeditemssuchasfootwear,lowendconsumerelectronics,toys,etc.  0h*. *9ddd qtd td td "",dd , dd , dd +  )??? p )Table5.3 :???'!d??? :HourlywagecostsintheclothingindustryinselecteddevelopingcountriesinUSdollars;1993(wages+socialcontributions) /? P??? /AFRICA ,9@ ? ,Egypt [9?H@ 9 Q?0.43Q?[0.43 W?HC@ " Q?0.43 Q?9? W*0Xn#&XX* )99 P? )Kenya X99?E P99 q= ףp?0.23q= ףp?X0.23 W?HC P " q= ףp?0.23 q= ףp?99? W )99@  ? )Mauritius X99?E@  99 p= ף?1.04p= ף?X1.04 W?HC@  " p= ף?1.04 p= ף?99? W )99 P ? )Morocco X99?E P99 (\?1.06(\?X1.06 W?HC P" (\?1.06 (\?99? W )99@? )Nigeria X99?E@99 HzG?0.27HzG?X0.27 W?HC@" HzG?0.27 HzG?99? W )99P ? )Tunisia X99?EP 99 p= ף?1.54p= ף?X1.54 W?HCP " p= ף?1.54 p= ף?99? W )99@ ? )Zambia X99?E@ 99 Q?0.24Q?X0.24 W?HC@ " Q?0.24 Q?99? W )99P ? )Zimbabwe X99?EP 99 ffffff?0.35ffffff?X0.35 Y9?JCP " ffffff?0.35 ffffff?99? Y *9@9? * 99?&@9 9 79?(&@"  9? 7ASIA )99b9? )Bangladesh X99?Eb 99 {Gz?0.16{Gz?X0.16 W?HCb!" {Gz?0.16 {Gz?99? W )99R"? )China X99?ER#99 ?0.25?X0.25 W?HCR$" ?0.25 ?99? W )99b%? )India X99?Eb&99 HzG?0.27HzG?X0.27 W?HCb'" HzG?0.27 HzG?99? W )99R(? )Indonesia X99?ER)99 Q?0.28Q?X0.28 W?HCR*" Q?0.28 Q?99? W )99b+? )Malaysia X99?Eb,99 p= ף?0.77p= ף?X0.77 W?HCb-" p= ף?0.77 p= ף?99? W )99R.? )Pakistan X99?ER/99 HzG?0.27HzG?X0.27 W?HCR0" HzG?0.27 HzG?99? W )99b1? )Philippines X99?Eb299 Q?0.33Q?X0.33 W?HCb3" Q?0.33 Q?99? W )99R 4? )SriLanka X99?ER 599 ffffff?0.35ffffff?X0.35 W?HCR 6" ffffff?0.35 ffffff?99? W )99!b7? )Thailand X99?E!b899 Q?0.71Q?X0.71 W?HC!b9" Q?0.71 Q?99? W )99R#: ? )Vietnam X99?ER#;99 p= ף?0.26p= ף?X0.26 Y9?JCR#<" p= ף?0.26 p= ף?99? Y *9$b=9? * 99?&$b>9 9 @9?1&$b?"  9? @CENTRALAMERICA :99+)P&A"669? :CostaRica1 X99?Ed%B99 )\(?0.88)\(?X0.88 XNHd%C" )\(?0.88  )\(?99? X 99 & C DominicanRepublic1 X99?E&s D99 {Gz?0.64{Gz?X0.64 W?HC&s E" {Gz?0.64 {Gz?99? W )99c(!F? )Honduras1 X99?Ec(!G99 Q?0.48Q?X0.48 W?HCc(!H" Q?0.48 Q?99? W )99)s#I? )Jamaica1 X99?E)s#J99 (\?0.83(\?X0.83 \9??IC)s#K" (\?0.83 (\?99? \1&b5%%XX~2Ԁrefersto1991 7???$c+$L9?? 7Source:ILO󀄀RecentDevelopmentsintheClothingIndustry,ILOSectoralActivities ,c&M _Programme_,Geneva,1995#X~2X%%&b53#+!-?'N  ??? +  0#*P *w9dddd dd dd 9""w,dd ,?dd ,dd ,dd ,dd ,dd ,dd +  +! p +O)XX~2Table5.4CostComparison(US$)forMensCasualLongSleevedShirt#X~2X)O# Pzz?)d"   //P&b5%%XX~2CountryandItem#X~2X%%&b5# @zz/! zz @&b5%%XX~2Zimbabwe#X~2X%%&b5#&b5%%XX~2 @zz/! "zz @Kenya @zz/! "zz @Senegal @zz/!  "zz @Ghana @zz/!  "zz @India @zz/!  "zz @#X~2X%%&b5#XX~2UnitedArab 4  Emirates#X~2Xq#&b5%%XX~2 H>' " // zz /HFabric [Q!J  = ףp= @3.28= ףp= @[3.28 }sCJ " = ףp= @3.28 = ףp= @ @3.00@}3.00 }sCJ " @3.00 @ = ףp=@4.31= ףp=@}4.31 }sCJ " = ףp=@4.31 = ףp=@ q= ףp @3.18q= ףp @}3.18 }sCJ " q= ףp @3.18 q= ףp @ 333333@2.90333333@}2.90 }sCJ " 333333@2.90 333333@ @2.95@}2.95 oeNJ " @2.95 /0  @ /oMisc.Materials [Q!e  ףp= ?0.31ףp= ?[0.31 }sCe " ףp= ?0.31 ףp= ? ?0.40?}0.40 }sCe " ?0.40 ? ?0.55?}0.55 }sCe " ?0.55 ? zG?0.42zG?}0.42 }sCe " zG?0.42 zG? (\?0.39(\?}0.39 }sCe " (\?0.39 (\? Gz?0.37Gz?}0.37 oeNe " Gz?0.37 /0  Gz? /oWashing [Q!  ?0.10?[0.10 }sC " ?0.10 ? Q?0.12Q?}0.12 [QC  " Q?0.12 Q? [ [Q! !" )\(?0.11)\(?[0.11 }sC "" )\(?0.11 )\(? Q?0.12Q?}0.12 }sC #" Q?0.12 Q? Q?0.12Q?}0.12 oeN $" Q?0.12 /0  Q? /oLabels/Packaging [Q!+% {Gz?0.16{Gz?[0.16 }sC+&" {Gz?0.16 {Gz? ףp= ?0.31ףp= ?}0.31 }sC+'" ףp= ?0.31 ףp= ?  ףp= ?0.36 ףp= ?}0.36 }sC+("  ףp= ?0.36  ףp= ?  ףp= ?0.36 ףp= ?}0.36 }sC+)"  ףp= ?0.36  ףp= ? ?0.40?}0.40 }sC+*" ?0.40 ? zG?0.42zG?}0.42 oeN++" zG?0.42 /0  zG? /oDir./_Indir_._Labour_ [Q!F , Q?1.72Q?[1.72 }sCF -" Q?1.72 Q? q= ףp?1.34q= ףp?}1.34 }sCF ." q= ףp?1.34 q= ףp? zG@2.36zG@}2.36 }sCF /" zG@2.36 zG@ Q?1.22Q?}1.22 }sCF 0" Q?1.22 Q? Q?1.22Q?}1.22 }sCF 1" Q?1.22 Q? ?1.60?}1.60 oeNF 2" ?1.60 /0  ? /oTransporttoport [Q!a 3  ףp= ?0.18 ףp= ?[0.18 }sCa 4"  ףp= ?0.18  ףp= ? ?0.20?}0.20 }sCa 5" ?0.20 ? 333333?0.15333333?}0.15 }sCa 6" 333333?0.15 333333? ?0.05?}0.05 }sCa 7" ?0.05 ? 333333?0.15333333?}0.15 }sCa 8" 333333?0.15 333333? (\?0.17(\?}0.17 oeNa 9" (\?0.17 /0  (\? /oSubtotal [Q!| : @5.75@[5.75 }sC| ;" @5.75 @ {Gz@5.37{Gz@}5.37 }sC| <" {Gz@5.37 {Gz@ Q@7.73Q@}7.73 }sC| =" Q@7.73 Q@ \(\@5.34\(\@}5.34 }sC| >" \(\@5.34 \(\@ Q@5.18Q@}5.18 }sC| ?" Q@5.18 Q@ Q@5.63Q@}5.63 oeN| @" Q@5.63 /0  Q@ /oQuotaCost @z/! A @_n.a._ @z/! B"z @_n.a._ @z/! C"z @_n.a._ @z/! D"z @_n.a._ bzQ! E"z @3.00@b3.00 zsC F" @3.00 @z ?1.50?1.50 mz\N G" ?1.50 /0  ?z m#X~2X%%&b5# TotalCost &b5%%XX~2 bzQ!W Hz @5.75@b5.75 zsCW I" @5.75 @z {Gz@5.37{Gz@5.37 zsCW J" {Gz@5.37 {Gz@z Q@7.73Q@7.73 zsCW K" Q@7.73 Q@z \(\@5.34\(\@5.34 zsCW L" \(\@5.34 \(\@z \(\ @8.18\(\ @8.18 zsCW M" \(\ @8.18 \(\ @z Q@7.13Q@7.13 _UCW N" Q@7.13 Q@z _  Note:#X~2X%%&b5"#XX~2ThisstudywasconductedbeforethedevaluationoftheCFAFranc.Giventherecentdevaluation,Senegals gO _labour_Ԁcostnowappeartobemoreinlinewithitsneighbors.#X~2X&#&b5%%XX~2 @6$CP @Source:#X~2X%%&b5'#XX~2_Biggs_Ԁetal.(1993).AfricaCanCompete!,WorldBankDiscussionPapers,AfricaTechnical Q DepartmentSeries,WashingtonDC,p.41.#X~2Xp(#&b5%%XX~2 {R 4*(T  4#X~2X%%&b5l)#  Thesecondmajorsourceoflocationspecificadvantageisthepreferentialaccessof +T SouthernAfricancountriestomarketsinindustrialcountries.Textilesandapparel,forinstance,areexcludedfromtheGeneralizedSystemsofPreferences(_GSP_)whichaccordsdutyfreestatustogoodsfromanumberofdevelopingcountriesbutaresubjecttoquantitativerestrictions,orquotas,imposedbysingleimportingcountriesundertheMultiFibreAgreement(MFA).Atpresent,withtheexceptionsofMauritiusandLesotho,noquotasareimposedonSubSaharanAfricancountriesbytheUnitedStates,oneoftheworldslargestimporters.NomajorAsianmanufacturerofgarment,onthecontrary,enjoysunrestrictedaccesstomarketsintheUnitedStatesandtheEuropeanUnion.  For_EPZ_Ԁgoods,theexistenceofpreferentialchannelsisamainfactorindeterminingthegeographicalcompositionofinvestmentandtrade.Inpreviousyears,forinstance,awaveofrelocationtonewcomercountriessuchasBangladesh,China,MauritiusandSriLankatookplaceasaresultofgrowingwagepressuresandtheimpositionofquotasonthoseAsianeconomiesthatfirstdevelopedathrivingexportorientedgarmentindustry.Inmostrecentyears,thenumberofexportingcountriessubjecttoquotasintheUSapparelmarkethasincreasedconsiderably,inducingafurthergeographicalreshufflinginthedecentralizedproductionnetworkscomprisingtheindustry.Thecoincidenceofnewlyfound,reasonablycompetitiveconditionsforthemanufacturingofgarmentinselectedlocationsinAfricaandtheincreasedvalueoftheirquotafreestatus,isinducinginternationalgarmentmanufacturers,fromAsiainparticular,toconsidersomerelocationtotheregion.USimporters,whosesourcingstrategiesspantheglobe,arealso aggressivelysearchingforquotafree,lowcostproducerstoservethelowandmediumprice .(i segmentsoftheapparelmarket.SomelargebuyershavealreadyestablishedpurchaseprogramsfromselectedlocationsinAfrica,andsetuplocaloffices._M 0  40      _Ԁ \  0  2.0` ""Regionspecificinvestment4 ` "` "    RegionspecificinvestmentincludeinternationalinvestmentwhichisattractedtoSouthernAfricaby_locationally_Ԁspecificresourcessuchasprimarycommoditiesorotherendowments._N 0  41      _ԀA   majorgroupofinvestors,however,includeinvestorsfromtheregion.Asaresultofhigherwagesandtheneedtoupgradeproduction,Mauritianfirmshavestartedtorelocate_labour_Ԅintensivestagesofproductionto_EPZs_ԀinMadagascarand,toalesserextent,Kenya.Inthis,theyfollowapatterncommontomanyfirmsindevelopingcountriesthatafterhavingsuccessfullyenteredtheinternationalmarketnowneedtoconsolidatetheirpositionintheinternationaleconomybymovingupmarket.ThereachofMauritianinvestorsmightwellspreadtootherlocationsintheregion,byvirtueoftheadvantagesofgeographicalproximityinorganizingproductionacrossborders,therebyultimatelyleadingtothecreationofregionalinvestmentandproductionnetworks.  Sincetheendofapartheid,moreover,therehavebeensignificantinvestmentstonearbycountriesfromSouthAfrica.Largefirms,inparticular,areexportingandinvestingmassivelytoconsolidatetheireconomicleadershipintheregion,beforemovingontotheinternationalmarket.Theconsequencescanbeseenintheinvestmentinmining,brewing,foodprocessingandretailingthatflowedtocountriessuchasZambia,TanzaniaandMozambique,butalsointhesuccessoftheschemesforthepromotionofindustrializationinBotswana,LesothoandSwaziland.Inamediumtermperspective,SouthAfricacouldemergeasagrowthpoleforthesubregion,anditsdomesticmarketapotentialtargetforinvestorsfromoutsidetheregion,accessibleeitherdirectlyorindirectlythroughexportplatformsinthesubregion. 0  3. ` The_EPZ_ԀfeverinSouthernAfrica T""   Inthelightoftheinvestmentprospectsdescribedabove,thereisarationaleforeffortstoenhanceandpromotetheattractivenessofselectedlocationsinSouthernAfricatobothinternationalandregionalinvestors.ItisnosurprisethatinNamibia,Malawi,ZimbabweandmorerecentlySouthAfricaandBotswanathereisaninteresttoestablish_EPZs_Ԁinordertotakeadvantageofthe_FDI_Ԁdriveforemploymentpurposes.  $l! %  ("% %0  Thebenefitsofan_EPZ_ԀstrategyinSouthernAfrica...p""   Byprovidingincentivesandfacilities,_EPZ_Ԁmayalleviateperceivedoperationalconstraintsofforeigninvestors,enticingthemtotakeadvantageofSouthernAfrica_labour_Ԁandunrestrictedaccesstomarketsinindustrializedcountries._EPZs_Ԁorfirmswith_EPZ_Ԁstatuswouldthengeneratesomenetforeignexchangeearningsandrapidlycreatejobs.SinceAfricasuffersofapoorreputationasaproductionsite,_EPZs_Ԁcouldbeusedasamarketingtoolforimagebuildingandfurtherpromotionof_FDI_.  Localfirms,notonlyforeigninvestors,couldderivebenefits.Thosewithexportpotentialcouldincreasetheirlinkswithinternationalmarketsbybeinggranted_EPZ_Ԁstatus.Inthisregard,dutyfreeaccesstoforeignproductioninputsthatareessentialforinternationalcompetitivenessislikelytobeamainadvantage.Locallyownedfirmscouldgainexposuretonewmanagementandmarketingskillsbyteamingupwith_EPZ_Ԁforeigninvestorsorworkingforthemassubcontractors.Somepoolingofentrepreneurialskillswithinazoneoran_EPZ_Ԁpromotedindustrymightalsofoster_externalities_Ԁandinnovation.Throughemulation,spilloverswouldthenslowlyaccruetonon_EPZ_Ԁfirms.0  ...andthelimits""   Whilethepotentialbenefitsareimportant,itisalsoimportanttoconsiderthelimitationstowhatcanbeachievedsimplybymeansofan_EPZ_Ԅtypeinvestmentpromotionstrategy.First,itisunlikelythat_EPZs_ԀinSouthernAfricawillattractlargescalemanufacturinginvestmentbymajor,wellestablishedtransnationalcorporations.Thebusinessenvironmentislikelytobeconsideredstilltooriskytojustifytheestablishmentofspecializedsubsidiaries,likeforinstancethoseassemblingkeycomponentsfortheglobalproductionanddistributionnetworksofmajorcompaniesinelectronics.Thelackofreliablepotentiallocalpartners,orthelackofinformationaboutthem,willalsomakeitlesseasytoenterintojointventurearrangementsasawaytoalleviatethecostsofforeignness..Smallandmediumsizedinvestors,whoseinvestmentstrategiesaremoreflexibleandlessdemandingofcapitalaswellasmorevolatile,willbemainlyinterestedinexploitingthenew_EPZ_Ԁopportunities.  OtherfactorsmilitateagainsttheprobabilityofamassiveinflowofinvestmentinSouthernAfrica_EPZs_.Competitionfor_FDI_Ԁinsimple_labour_Ԅintensiveactivitiesinthedevelopingworldismuchstrongernowthatitwastwentyortenyearsago.Inthiscompetition,geographymatters.Evenforthegeographicallyhighlydecentralizedproductionnetworksthatcomprise_EPZs_,thereareforcespushingtowardsgroupingaroundregionalmarketclusters.RelativetoSouthernAfricancountries,currentandprospectivecompetitorsatthebottomendof_EPZ_ԀproductionchainsinAsia,suchasChina,VietnamandCambodia,cantakeadvantageoftheirgeographicalandculturalproximitytothosefirmsthatarenowthemostdynamicinvestorsinthetraditional_EPZ_Ԁindustries.CountriesinCentralAmericaprofitfromtheirclosenesstotheUSmarketandtradeagreementssuchas_NAFTA_ԀandtheCaribbeanBasinInitiative.CountriesinCentralandEasternEuropeandNorthAfricaare_favoured_ԀbytheinterestoftheEuropeanUnionindevelopingcommerciallinkswiththoseregions.̀  Tradepreferencesmattertoo,butthevalueofSouthernAfricaunrestrictedaccesstomarketsinrichcountriesisunstableandtemporary.Anexcessivelyrapidgrowthinimportsfrom 0h*. agivencountrycouldinducearevisioninitsquotaallocations.Intextilesandgarment,moreover,thephasingoutoftheMultiFibreArrangementoveratenyearperiodhasbeenagreedattheUruguayRoundnegotiations.TheabolitionofthequotasystemisbringingaboutbehindthesceneconcernbylessdevelopedMFAsuppliersforthegeographical_reconcentration_Ԁofproductiontohighlycompetitive,dominantsupplierssuchasthosebasedintheHongKongCoastalChinaregion.  Large_EPZ_ԀinvestmentintoSouthernAfricacouldalsofindanaturalbrakeininfrastructureandotherdeficiencies._EPZ_Ԁoperationsdonotgenerallyrequireparticularlysophisticatedbusinessandphysicalinfrastructure.Atamodestlevelofactivity,existingdeficienciesshouldonlymodestlyaffectthecompetitiveedgeoffirmsbasedinSouthernAfricaninexportingsimplegoods.Wereoperationstoexpandsignificantly,thesedeficienciescouldsoonbecamemajorweaknesses.Thelackofmanagersandskilledworkerswouldbecomecritical,whilethesupplyofunskilled_labour_Ԁcouldreachalimitinsomelocations,unlesscompensatedbyintraregionalmigration.Theadministrationof_EPZs_Ԁwouldbecomeburdensome(someofficialsourcesadmittedthatthesimplerecruitmentandtrainingofcustomofficialstocontrolshipmentsof_EPZ_Ԁgoodsinandoutofacountryisamajorchallenge).Majorbottleneckswouldappearintelecommunicationsandtransportation,seriouslyaffectingtheprofitabilityof_EPZs_.Bottlenecksintransportationwouldbeparticularlysevereforlandlockedcountries.Forexample,Zimbabwesaccesstoportfacilities(_Beira_,MozambiqueorDurban,SouthAfrica)requiresoverlandtransportation.Thus,itissubjecttothepoorconditionofroads,breakdownsintherailsystemorsecurityrisk.  Ingeneral,operationalconstraintswouldgrowstrongeras_EPZ_Ԁoperationsgrowinsophisticationandembraceabroaderrangeofindustries,e.g.foodprocessing,dataprocessing.Incidentally,itisworthnotingthattosignificantlyaddressbottlenecksintransportationandtelecommunicationsorhandlecrossbordermovementsof_labour_Ԁwouldrequireconcertedeffortsandcooperationattheintraregionallevel.̀  Othertraditionalproblemsof_EPZs_Ԁarethevolatilityofinvestmentandpoorbackwardlinkages.Whatisimportanttoemphasizeisthatpositivespilloversdonotautomaticallyaccruetothehosteconomiesthroughthetemporarypresenceofforeign_EPZ_Ԁfirms.ThereisaneedforabroadrangeofpoliciestosupportthecapacityoflocalfirmstoassimilatespilloversandinducesomestickinessofforeigninvestmentbymakingSouthernAfricanlocationsmoreattractiveintermsofinfrastructure,qualityof_labour_,trustrelationshipsetc.  Finally,sincevariousSouthernAfricancountriesaresimultaneouslyintroducing_EPZs_,prospectiveinvestorsinthesubregionwouldsoonbefacedwithasituationinwhichtheycanchoosefromahostofcompetinglocations.Thiscouldcreatea negativesumgameincentivewar.Thereissomeevidencethatfirmstargetbroadgeographicalareasintheirinvestmentplans;identifyanumberofsuitablealternativelocations;shoparound;andthenplacetheinvestmentinthesitewheretheycanseizethemostconcessionsfromlocalauthorities._O 0  42      _Ԁ <,%)   (-&*   HostgovernmentsinSouthernAfricacouldbelockedinasituationinwhichtheyfeelthey needtooffermorethantheirnearbycompetitorsasameanstotiltthebalanceofinvestorsinteresttowardstheirowncountry.Whoevergetstheinvestment,however,theburdenofconcessionswouldincreaseforallthecompetinglocations,andthebenefitsfromtheinvestmentwouldbeconsiderablyreducedforthewinner.Atthelimit,werecountriestoofferasamehardpackageofincentives,_FDI_Ԁdecisionswouldbeultimatelydeterminedbypreincentive fundamentalfeatures,suchasnaturalportfacilities,alargesupplyof_labour_,acompetentandefficientpublicadministration,orpoliticalstability.Thesuggestioncouldbemadethat,inordertoattractefficientinvestmentonthebestterms,SouthernAfricancountriesshoulddesistfromofferingexcessiveconcessionsandrathertrytobuildtheirappealdirectlyaroundthoseelementsoftheirgenuinelocationadvantagesthatbestcomplementtheneedsofforeigninvestors.Thecasemightalsobethereformutuallyagreeddeescalationofincentivepackagesbetweencountriesinthesubregion.  Tosumup,_EPZs_ԀinSouthernAfricashouldbeconsideredastransitionalarrangementsusefultograspsomebenefitfromtemporaryshiftsinthegeographicalorganizationofproductionofafewsimplemanufacturingitemsthataretradedglobally.Theycannotcompensateforfarreachingeffortsatremovingoperationalconstraintstogreaterinvestmentinmanufacturing._EPZ_designandimplementationhavetobeintegratedwithinoverallstrategiesaimedatembeddingforeigninvestment,buildingupgenuinelocationadvantagesandcreatingconditionsfortheefficientorganizationofproductionfortheinternationalmarketthroughoutthehostSouthernAfricaneconomies.Tosimplyestablishan_EPZ_Ԁisnotasolutioninitself.Evenlessasolutionisanybidtoachievelocationadvantagebymeansofbuildingupthereputationofacountryasalowcost,unionfreeproductionsite.  T КCONCLUSION   EchoingsuccessfulexamplesinEastandSouthEastAsia,manycountriesinSouthern H Africaareintroducing_EPZ_Ԅtypeincentiveschemeswiththeaimtogeneratebadlyneededjobsandtopavethewayforgreaterparticipationoftheireconomiesininternationalmarkets.DespitethefactthatsitesinAfricaareusuallynotontheshortlistofinternationalinvestors,somefactorssuggestthatsuccessmightbefoundinthisinitiative.ExperienceinLesothoisshowingthatfootlooseinvestorsfromoutsidetheregionmayreactwithsomepromptnesstotheopportunitiestofillexportquotaswhicharelefttocountriesinSouthernAfricaunderexistingarrangementsforpreferentialaccesstoindustrializedcountries'markets.Beyondthis,thesuccessof_EPZs_ԀinSouthernAfricacouldbe_favoured_Ԁbytheformationofcrossborderproductionnetworksdrivenbycoreinvestorsrootedintheregion.Therelocationof_labour_ԄintensivemanufacturingactivitiesfromMauritiusto_neighbouring_Ԁlocations,andthegrowingflowsofinvestmentsfromSouthAfricatonearbycountriesareembryonicbutremarkableexamples.Overall,however,thereplicationof_EPZs_ԀthroughoutSouthernAfricaisnotaguaranteeofattractingforeigninvestors.Competitionamongdevelopingcountriesforforeigninvestmentisstrongandsophisticated.ThecomparativeadvantagesoflocationsinSouthernAfricamayquicklyfadeaway,particularlyaslongastheystemexclusivelyfromlow_labour_Ԁcostsratherthanimprovementsinthe(businessandphysical)infrastructureneededtoorganizeproductionfortheinternationalmarket._EPZ_strategiesmustbeaccompaniedbyeffortstoattractstableandefficientforeigninvestmentandbymeasurestopromote_indigenisation_Ԁofexportcapabilitiesfortheregionalandglobalmarkets.  AsshownbyexistingincentivedriveninvestmentpoliciesintheSouthernAfricansubregionaswellasempiricalevidencefromelsewhere,_EPZ_Ԅtypestrategiescanbecomparativelysuccessfulwithoutdiminishing_labour_Ԁstandards.Furthermore,asinvestmentdecisionsarenotsubstantiallymotivatedby_labour_Ԁcosts,itisunlikelythatthereductionof_labour_Ԁstandardswillleadtosignificantadditionalinvestmentintotheregion.Itisontheotherhandcertainthatthediminutionof_labour_Ԁstandardswillatleastbedestabilizingandatworsthaveadverseconsequencesforproductivityandskillsdevelopmentintheregion.Theresultingconstraintsmayhindereffortsatcreatingsustainablecompetitiveadvantagesandembarrassgovernmentsintheirrelationshipswithsupranationalbodiesandothercountriesintheregionandtheworld.Toconclude,theremovalorreductionof_labour_Ԁstandardsisnotonlycontrarytointernationallyrecognizedprincipleswhichhavebeenacceptedinthesubregion,butalsounnecessaryforthesuccessofSouthernAfrican_EPZs_.@ffF`*****  #/XXXX~2O#