Misuse of free production zones and export enclaves
Nature: Factories for world market oriented (semi-)manufacture in free production zones, export enclaves and other sites, with a structure of production which is competitive on the world market (not merely the local protected market), are very fragmented, highly susceptible to trade fluctuations and basically parasitic on the local economy and society. Nevertheless a world market for production sites is developing, on which the traditional industrial countries and the developing countries are forced to compete with and against each other to retain or attract world market oriented manufacturing industry. Although capital uses and needs the state to fulfil a variety of functions, this does not necessarily mean it has to be reliant on one particular state.
Incidence: The international competitiveness of manufacture at traditional sites is threatened by lower-cost manufacture at new sites increasingly located in the developing countries and centrally planned economies. Examples can be found in synthetic fibres, textiles and garments, leather and footwear, steel-making, ship-building, watchmaking, optical industry, and sections of the mechanical and electrical engineering industries.
Claim: In free trade zones cheap goods are produced which flood Western markets, displace jobs, and unleash protectionist outcries. It is also in these zones that multinational firms exploit cheap, unskilled labour, practise transfer pricing and other techniques of disguised profiteering. Technology and skill-transfer are not a consequence of setting up free trade zones because they are used primarily in the assembly stages of the production cycle.
Problem Type: E: Emanations of other problems
Date of last update 03.09.2000 – 00:00 CEST