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Special Economic Zones in Africa
Box 2.5
The WEPZA Debate on Public versus Private Zones In 1992, the World Economic Processing Zones Association (WEPZA) held a conference whose proceedings were entitled Public vs. Private Free Zones. A key part the conference was a debate between the manager of the public Barcelona Free Zone and the CEO of a Mexican private industrial zone group. The case for public zones, Juan Torrents, Barcelona Free Zone • Public zones are instruments of public policy, uniquely capable of providing public goods with broad impact: employment, attracting FDI, improving technology, increasing labor skills, etc. • They are instruments of industrial policy, focused on the long term. Private zones have no interest in these national strategic issues. • Public zones have a duty to serve all clients equally, no matter their respective size or origin. Public zones can help small firms in a way that private zones cannot. The case for private zones, Sergio Bermudez, Grupo Bermudez • Private zones correspond to the reality of the global economy—by being profitoriented, they maximize their competitiveness. • They are divorced from short-term politics and are focused on the long term. • They must apply strict financial rules, thus maximizing efficiency. This requires innovation and flexibility. • Investors prefer to deal with a private company rather than with the government. They are shielded from corruption and red tape and have, in case of disputes, a better chance of a positive outcome. Source: The Services Group. 1999.
the positive experience in East Asia is not restricted to public zones. The Philippines, for example, has had major success (200-plus zones, 3 million employed, 85% of exports from the SEZs) with a completely private program. • In Africa, continued reliance on public zones may be one factor behind the lackluster performance. But private-sector-led zone programs have also generally failed in the region. Whatever the performance, privately operated zones are becoming the norm. According to FIAS (2008), while private zones represented