Export Promotion Via Industrial Enclaves : The Philippines Bataan Export Processing Zone

The economic merits of export processing zones as a form of export promotion are studied by focusing upon a large, long-established zone in the Philippines. It is shown that although the absence of trade duties and other regulations led the zone to generate significant benefits for the Philippines through employment and foreign exchange earnings, this effect was outweighed by the heavy public infrastructure investment necessitated by the choice of location. Moreover, although the firms occupying the zone are predominantly foreign, over ninety per cent of their investment was financed by government-guaranteed borrowings from within the Philippines.