Criticisms of Export Processing Zones

A report by the International Confederation of Free Trade Unions (ICFTU)[1] states that the supposed benefits of EPZs are limited for a number of reasons:

  • work tasks involve simple processing operations, requiring limited and non-transferable skills;
  • most jobs are poorly paid and of low quality;
  • only a small percentage of foreign currency earnings remain in the country;
  • investments are insecure and can easily re-locate to another country offering a more attractive
  • investment climate, and;
  • materials are often imported rather than sourced from the local market.

The ICFTU report also suggests that: “Serious questions remain as to the real benefits of EPZs to development. By its very nature, EPZ investment is precarious, and likely to leave the country at a moment’s notice if a cheaper, more compliant workforce is on offer somewhere else.”[2]

Similarly, John Madeley suggests that the main beneficiaries of EPZs are the transnational companies, rather than the host countries: “They have a record of facilitating exploitation and make a very limited contribution to the overall development of the countries in which they are located.”[3]

A further criticism of EPZs as a development mechanism, and one widely publicised by the NGO sector, relates to the poor working conditions and labour rights violations which occur in the factories situated in the zones, such as the maquilas in Central America. The ICFTU report states that governments offer a weak framework of social and employment rights as part of the incentive package to attract investors, either explicitly through exempting them from labour laws, or passively, through the lack of regulation or enforcement of these laws.[4]

[1] International Confederation of Free Trade Unions (2003) ‘Export processing zones – symbols of exploitation and a development dead-end’ (September p.5) (accessed 24 August 2009)
[2] Ibid.
[3] Madeley, J. (2008, second edition) Big business, poor people: How transnational corporations damage the world’s poor, Zed Books, London (p.153)
[4] Op.cit (ICFTU)