Export Oriented Institutional Changes: The Function and Significance of Export Processing Zones in the Belizean Economy

Export oriented institutional changes are increasingly being recognized as important factor in the economic development of countries. These changes have led to an increase in the global movement of Multi-national companies. Besides bringing capital to their host countries, these Multi-national companies facilitate the transfer of technology, organizational and managerial practices and skills as well as access to international markets. Economic diversification is also another result of the surge of export oriented institutional changes. The loss of the traditional preferential markets and decline in the global prices for exports in agricultural sector as a result of globalization threatens the once dominant agricultural sector of developing countries. More and more countries are striving to create a favourable and enabling climate to attract investment as a policy priority utilizing export oriented institutional changes. Liberalisation and deregulation are taking place in almost every corner of the world with the aim of allocating resources more efficiently in an environment which is favourable for free flow of resources seeking higher efficiencies. Technological progress further accelerates the rate of globalisation by making better means of production and transaction available. Today's dynamic environment imposes a very challenging task for policy makers in charge of policy formulation on trade and investment affairs. These policy makers need to quickly evaluate the current situation, new opportunities and threats, and re-direct the course of the future. It requires gathering of accurate and the most up-to-date information and constant reassessment of policies based on that information. While the efficacy of incentives as a determinant for economic development is often questioned, countries have increasingly resorted to such measures in recent years. In particular they have been offering tax incentives to influence the location decisions of investors. The theme is very appropriate for Belize at present. The country has undergone structural changes. It is essential to re-evaluate the efforts undertaken by Belize to learn from and build on these initiatives. Belize’s export oriented institutional changes include The Commercial Free Zone Act of 1994 (Revised Edition 2000), The Mines and Minerals Act of 1994 (Revised Edition 2000), The Export Processing Act of 1991 (Revised Edition 2004), The Fiscal Incentives Act of 1996 (Revised Edition 2000) This paper utilized quantitative and qualitative methodologies to carry out a descriptive analysis of Export Processing Zones. The analysis draws lessons from the accumulated experience in several regions and countries. The relationship between Belize’s export oriented institutional changes, particularly the Export Processing Zone program, and the Belizean economy has been determined to be closely linked. The program has developed since 1990 from being identified with the old labour intensive garment zones of the past to the new dynamic emerging zones active in Data-Processing, Agro-Processing and Manufacturing. Also the program keeps evolving by accordingly updating the regulations and the administration of the program. In terms of employment, while the program does not employ a high percentage of Belizean employees, only two point eight (2.8) percent annually from 1998 to 2003; it has been providing a constant level of employment. This employment forms a foundation upon which other sectors of the export oriented institutional changes may build upon. Also EPZ are characterized by high female employment, which in Belize makes up approximately one third of the employed labour force. Therefore the program may be providing significant employment in terms of the female employment sector. EPZ exports have accounted for a significant amount of Belize’s total annual export since 1998, approximately thirty two (32) percent. Comparatively the program has also accounted for ten (10) percent of Belize’s annual gross import. While the human resource development of the companies in the program are mostly task specific and geared toward enhancing productivity and efficiencies within the companies, the employees are exposed to new technology, entrepreneurial and organizational skills that are diffused into the economy. The EPZ program, as an integral part of the overall export oriented institutional changes in Belize, is creating a favourable environment for investment and economic development The sub regional, regional, and multilateral integration which has accompanied globalization challenges EPZ to readjusts its operations to adhere to the new world order. Several countries have had success in adjusting their EPZ programs to the global integration and other countries are currently in the planning and preparation stages. Therefore it is evident that the challenge can be met and overcome and the end result proposes to be on global market and economy where the ultimate aim of the welfare of all may be attained. It is essential that on a global level, EPZ policies and other export oriented institutional changes are upgraded to reflect the new paradigm shift