View
230
Download
3
Category
Preview:
Citation preview
THE WORLD BANK
Thomas Farole,
Senior Trade
Specialist
PRMTR
Book launch seminar
March 9, 2011
1
SPECIAL ECONOMIC ZONES IN AFRICA: COMPARING PERFORMANCE AND LEARNING FROM
GLOBAL EXPERIENCE
THE WORLD BANK
Why the interest in SEZs in Africa?
-
500
1,000
1,500
2,000
2,500
3,000
3,500
1975 1986 1997 2006
World excl Africa Africa
>100
Source: ILO (2007), FIAS (2008)
Potential to address key constraints to investment and job creation →
infrastructure, scale, investment climate
High profile zone successes→ Korea, Malaysia, China, Costa Rica,
Mauritius
… but also plenty of failures. Need for better understanding of
performance and the factors that contribute to sustainable success
THE WORLD BANK
A few caveats
SEZ v EPZ v FZ v IZ… many concepts, often quite
different. The subject of this book is mainly EPZs.
Data on zones is hard to come by… and harder to
trust
This is a story about Africa, but much of it should
resonate beyond the continent
THE WORLD BANK
Background and methodology
BNPP funded research program designed in partnership with
the Investment Climate Department
Ten countries
Africa: Ghana, Kenya, Lesotho, Nigeria, Senegal, Tanzania
Asia: Bangladesh, Vietnam
Latin America: Dominican Republic, Honduras
Methodology: case studies and surveys of SEZ firms
Field research carried out between June 2009 and January
2010
THE WORLD BANK
A few key findings on zone performance
THE WORLD BANK
African zones have not yet delivered on their
potential: limited investment# of active firms operating in economic zones (2009)
THE WORLD BANK
Exports are low in most African zones, and some
evidence that growth is slowingZone exports (US$m)
THE WORLD BANK
Job creation has been limited – many African
zones are surprisingly capital intensive
SEZ employment (2008) SEZ employment as % of national industrial sector employment
Bangladesh 218,299 3%DR 124,517 30%Honduras 130,000 30%Vietnam 1,172,000 19%
Ghana (Tema) 2,0253.5%
Ghana (single units) 26,534Kenya (EPZs) 15,127
15%Kenya (single units) 15,551Lesotho 45,130 >80%Nigeria (Calabar- est.)
1,156<1%
Nigeria (Onne- oil & gas)
20,000 N/A
Tanzania 7,500 2.5%
Source: SEZ employment based on data from individual country SEZ authorities; national industrial
employment from various sources
THE WORLD BANK
What matters most to investors in SEZs?
Investor perception of criteria determining investment location
(ranked in order of importance)
Investment criteria Rank
Cost and quality of utilities 1
Access to transport infrastructure 2
Business regulatory environment 3
Tariffs, duties, rules of origin 4
Level of corporate taxes 5
Access to highly skilled labor 6
Access to suppliers 7
Access to low cost labor 8
Availability and cost of land and buildings 9
Access to local and regional markets 10
Access to technology 11
THE WORLD BANK
What matters for SEZ program performance?
exports investment employment
Zone investment
climate
infrastructure -0.654** -0.145 -0.832**
customs -0.698** -0.654* -0.579*
logistics 0.805** 0.103 0.843**
setup 0.386 0.053 0.340
onestop -0.314 0.313 -0.233
regulation -0.201 -0.310 -0.218
National investment
climate
GCI 0.396** 0.473** 0.486**
DB -0.214 -0.352** -0.287**
WGI 0.195 0.141 0.155
Traditional factors
incentives 0.069 -0.424** 0.072
wages 0.073 0.146 0.289**
preferences -0.022 -0.083 -0.029
Management private -0.070 -0.133 0.104
Market access
Remote 0.026 -0.158 0.048
Market 0.402** 0.654** 0.431**
GDP/cap 0.100 0.335** 0.331**
Access 0.165 0.074 0.307**
Other years 0.230 0.175 0.160
THE WORLD BANK
Do SEZs improve the investment climate? – utilities
quality
44
4
95
46
-
10
20
30
40
50
60
70
80
90
100
Africa avg Non-Africa avg
Zones Country
54%
92%
Average downtime (hours) monthly resulting from power outages
THE WORLD BANK
Do SEZs improve the investment climate? –
transport (soft) infrastructure
Average time needed for imports (through main seaport) to clear customs (days)
7.1
3.4
10.3
11.0
-
2.0
4.0
6.0
8.0
10.0
12.0
Africa avg Non-Africa avg
Zones Country
31%
69%
THE WORLD BANK
Some conclusions and policy messages
THE WORLD BANK
Traditional EPZ model increasingly inappropriate
These may all have a role, but risk of “race to bottom”
SEZ success linked to competitiveness of national economy
Consider re-orienting to better exploit comparative advantage
and regional markets will mean re-focusing on zones as
spatial industrial strategy – promoting clusters and value chains
EPZ MODELLow labor
costs
Fiscal
Incentives
Trade preferences
THE WORLD BANK
Starting points for improving potential to attract and
retain investment in SEZs
Improved strategic planning and a transparent, robust legal and
regulatory framework
Address infrastructure gaps inside and beyond the gates:
integrated approach linking to trade gateways
Utilities
Road connections and port improvements
Social infrastructure
Improve zone management through:
− Stronger and more consistent government policy support
− Institutional improvements – authority and coordination
− Private sector participation
THE WORLD BANK
Linkages are critical to achieving dynamic benefits
Worldwide, zones struggle to shift from being enclaves to
integrated contributors of wider economic growth
Traditional EPZ models work directly against integration –
need to promote domestic investment and open up potential
for exchange between zones and local markets
But improving linkages require actions outside zones alone
– Access to finance and entrepreneurship
– Training and skills development
– Open labor markets
– Public-private institutions to promote inter-firm
coordination and information exchange
THE WORLD BANK
Political economy: using SEZs as reform pilots
This is the real success story of China… and also Mauritius
Given the regulatory and wider investment climate constraints
to competitiveness in SSA, using SEZs as reform pilots is a
major missed opportunity to date
Also offer the potential for piloting innovations on social and
environmental compliance
Government willingness to deliver on piloting reforms
through zones may be a useful litmus test as to
whether the commitment and capacity exists to
follow-through with a successful zone program
THE WORLD BANK
In conclusion
1. Still early days – hardly a success story to date, but some
signs of progress
2. The African context is different – target: competitiveness,
regional markets, and value chain integration
3. Focus on: infrastructure and improved planning /operations,
but don’t forget the importance of national competitiveness
4. Long-term, dynamic success with zones requires integration:
Strategic integration: into industrial policy
Physical integration: transport, industry linkages
Institutional integration: inter-agency + public-private
There is much we still need to understand about zones and
how to make them more effective
THE WORLD BANK
1. An edited collection of papers (co-edited with Gokhan
Akinci) – “Special Economic Zones: progress, emerging
challenges, and future directions” – to be published in June
2. We are having another BBL on Monday March 14 at 3PM in
MC7-100
– This will focus on practical challenges with implementing
SEZ projects on the ground, with presentations from
practitioners
THANK YOU + 2 advertisements
Recommended