Export Processing Zones (EPZ) in Kenya, 'a race to the bottom'': a critical analysis of the Legal policy and institutional framework

Abstract

Export Processing Zones (EPZ) are designated enclaves in one, or sometimes several defined locations in a country where normal trade barriers such as tariffs and quotas are eliminated and bureaucratic requirements are kept to minimum to attract foreign direct investment. Free trade zones can be defined as labour intensive manufacturing centres that involve the import of raw materials or components and the export of factory products. I The EPZ represents a specialized form of investment incentive regime that has played a significant role in the evolution of globalized production by multinational enterprise (MNEs). Such a zone has been defined as 'a designated specialized industrial estate which produces mainly for export and which constitutes an enclave from the trade and customs regime of a country in which free trade applies'. 2 Historically, the EPZ grew out of a compromise between two conflicting strategies of economic development pursued by the least developing countries (LDCs). It was after the limited success of import substitution strategies in the late 1960s and 1970s, that in the 1970s certain LDCs, shifted their focus to a different variation import substitution and introduced EPZs as a means of partial and limited liberalization.