Export processing zone can be defined as a territory within a certain geographical location where the government allows the import of various factors of production i.e. capital, machinery, labour etc. without levying any taxes so that goods can be manufactured and exported from the country.
Advantage of an export processing zone
• It helps to boost the manufacturing sector the country and thus leading to the creation of job.
• It helps to boost the GDP and individual income of a particular economy.
• It helps to attract company to the particular country.
• On the whole export processing zones help in welfare and development of a particular economy
Disadvantage of export processing Zone
• Many a times companies dumb their goods in the domestic market which can lead to price wars and thus hampering the health of the domestic producer
• Many companies also tend to dump their waste in the host country which can be detrimental to the environment of the country.
Example of China
In the recent times China has been the manufacturing hub of the world. We have seen manufacturing companies from all over the globe having their manufacturing plants in China. This has not only been fuelled by the availability of cheap labour but also by the presence of a large no of export processing zones in the country. This has booted the GDP of the country and China has been achieving a double digit growth in the recent past.
Recent trends in India
In the recent years the government has been particular to boost up the manufacturing sector of the country and thus many has launched many initiatives such as “Make in India “,” Skill India” etc. The growth story has also been fueled by the creation of export processing zone in strategic location of the country
Hence, this concludes the definition of Export Processing Zone along with its overview.
This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.
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