Title: A comment on the optimal structure of Export-Processing free Zones

Authors: Trond-Arne Borgersen

Addresses: Faculty of Business, Social Sciences and Foreign Languages, Ostfold University College, Remmen N-1757 Halden, Norway; The Financial Supervisory Authority of Norway (Kredittilsynet), Ostensjoveien 43, PB 100 Bryn, N-0611 Oslo, Norway

Abstract: This paper comments on the industrial structure of developing countries| Export-Processing free Zones (EPZs). As developing countries are exposed to irrecoverable entry costs in international markets, the relationship between export supply and exchange rates has been shown to be persistent. In addition to hampering entry, the market entry costs thus complicate export supply responses. As the form of persistence varies between industry structures, market entry costs might also affect EPZ optimal industry structure. To create successful export promotion programs through EPZ, these differences should be taken into account. This paper comments on how different export industry structures create export revenues and backward linkages, two of the main objectives of EPZ.

Keywords: developing countries; export processing free zones; EPZs; path dependence; foreign trade; export supply; exchange rates; market entry costs; export industry structures; exports.

DOI: 10.1504/IJTGM.2008.018435

International Journal of Trade and Global Markets, 2008 Vol.1 No.2, pp.107 - 117

Published online: 22 May 2008 *

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