Policy Conclusions: SEZs in Africa—When, What, and How?
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comparative advantage, integrate more effectively with local and regional markets, and adopt a much more flexible zone model that will support both of these efforts. These issues are discussed below. Look toward the flexibility of an integrated SEZ model: Zones as growth catalysts. The global trend in economic zones has been shifting away from traditional EPZs and toward larger scale, more flexible SEZs. In Africa, several countries, including Kenya and Tanzania, are moving in this direction. The SEZ model is typically designed over a wide geographic area that includes residential development and may encompass entire towns. More important, bearing in mind the issues discussed above, the SEZ model allows for (1) a broader range of activities, moving beyond simply processing and including such activities as logistics, services, and even agriculture, and (2) greater flexibility regarding sources of investment and the markets to which outputs are sold. Specifically, this means greater openness to domestic investment and sales into local markets, which could contribute significantly to the integration of zones with local economies and to their dynamic potential. The integrative potential of the wide-area SEZ could be particularly valuable in the African context, as one of the main problems in African zones has been that all the positive aspects of the zones (e.g., infrastructure, services, reduced corruption) tend to stop at the gates. This widearea SEZ model addresses development on a broader scale and allows for better links between hard and soft infrastructure investments and the core industrial park. Again, however, success requires that governments in the host countries view the projects as catalytic components of wider development opportunities integrated with key infrastructure investments (e.g., growth pole initiatives). Look toward sources of comparative advantage; this may mean greater attention to agriculture and natural-resource-based sectors in the short term. Most African countries are at a competitive disadvantage in the light manufacturing activities that have traditionally been the basis for economic zone investment, and global trends in trade and investment are likely to make this situation worse, at least in the near term. But this does not mean that no opportunities exist to attract manufacturing investment to African zones (for example, see “regional opportunities� below). However, African zones are much more likely to be successful by focusing on sources of sustainable comparative advantage. In terms of attracting investment in global export platforms, in most countries these comparative advantages are to be found