EXPORT PROCESSING ZONES AND INDUSTRIALIZATION THE TANZANIAN EXPERIENCE

Abstract

This paper examined the effectiveness of the Export Processing
Zones (EPZs) model as a policy option for industrialization in
Tanzania. This understanding was important since EPZs were
one of the main tools of industrialization utilised by the East
Asian countries. Following success stories registered by these
countries, many countries introduced and promoted EPZs as an
economic policy model to accelerate industrialization.
Although EPZs have been seen as a quick and efficient means
to accelerate industrialization, the experience throughout the
world shows that they have not been uniformly successful.
Moreover, the study was necessary because it is doubtful
whether EPZs designed purely under the tenet of neoliberal
policies can be effective in industrialising the country. Data
were analysed using descriptive statistical analysis, trend
analysis, and comparative analysis of EPZ performance
indicators based on secondary data and firm-level survey
responses. The results established that EPZ as a policy tool to
foster industrialization in Tanzania has been less effective.  Between 2006 and 2022, the programme attracted 173 firms,
generated a cumulative investment of US$1.64 billion, and
created about 69,108 jobs (around 4% of FDI-generated
employment nationally), while exports and domestic linkages
remain limited, with roughly 60% of firms relying entirely on
imported inputs. The paper contributes to the debate on EPZ
and industrial policy literature by questioning the neoliberal
free market assumption and recommends a hybrid EPZ
framework that integrates key elements of the East Asian
model, emphasising a more interventionist approach by the
state in directing EPZ development.