Assess the impact of Export Processing Zones (EPZs) on consumers and Essay

Assess the impact of Export Processing Zones (EPZs) on consumers and employees in developing countries. Answers should draw on examples and theories of international trade taught on this module - Essay Example Export Processing Zones holds pregnant promises to developing countries, with the hope of enlivened economy through foreign direct investors. It is just fitting therefore to study how they have affected developing societies through the eyes of the consumers and the laborers. EPZs are also designed to generate jobs for locals. With the presence of foreign investors and with the usually cheap labor in developing countries, Export Processing Zones promise job opportunities and improvement. Aside from the locals directly employed in the EPZs, it also adds to employment through backward and forward linkages. Backward linkage is formed through raw materials and financing suppliers which are mainly locals while forward linkage is observed through the spending of employees of EPZs (Ahmadu). The ability to export products even by developing countries, and benefit that they gets from the trade is clearly described by David Ricardo in his theory of comparative advantage. According to Ricardo, even if a country has the absolute advantage in all products, meaning he is the most efficient among all countries in production, it will still be worthwhile to trade with another country, so that both would be benefitted (Mankiw, 1998). David Ricardo constructed a two-country, two-good example with one country having the absolute advantage in the production of both and using the concept of opportunity cost, he was able to conclude that even in this situation trade would make both better off as this allows each country to specialize in the product that he does best. The Labor condition, however, is also a question. EPZ workers are observed to receive lower wages than their non-EPZ workers counterparts. In Sri Lanka, for example, earnings of workers in the electronics sector are slightly lower than the national wages in the same jobs while in South Korea and the Philippines, payment for overtime works are tied to normal working hours (Ahmadu). Payment incentive schemes that include "demerit points" that affect wages and job security increased work hours and inensity (Ahmadu). This disadvatanges happens due to the absence of regulatory authorities in Export Processing Zones. Due to this adverse work condition, unionisation is prevalent among EPZs, although union activities are limited in some countries. In the Philippines, for example, strike are unathorized, based on the recognition that EPZs are very crucial to the country's economic success. On Employment: The Philippine Case The Philippines has four Export Processing Zones, found in the provinces of Bataan, Cebu, Benguet and Cavite. Among these are 16 government-administered regional industrial centres and 36 private-owned businesses. The EPZs has been strongly supported by the past administrations beginning from President Marcos up to the Arroyo Administration. A study of the Center for Applied Research and Library Services in the country, however, has revealed that EPZ has been discriminatory against women in terms of employment with women required to be single and college educated while men are not and that jobs that require higher skills are usually given to men