Abstract:
The concept of the Export Processing Zones (EPZs) is an outcome of the changed management strategies of the global corporation. The establishment of the EPZs which are enclaves dealing with export processing was adopted as a strategy to restore the profit of global corporations in a recession ridden world economy. This strategy was speedily welcomed by the less developed countries (LDCs) like Sri Lanka as it coincided with the most unsuccessful strategy of import substitution.
The main concept of EPZs was conceived in the World in Mid 20th century as a unit bearing clusters of specially designed zones of aggressive economic activity for the promotion of export. EPZs that facilitate direct foreign investments have been defined by the World Bank (1992) as “fenced-in industrial estates specializing in manufacturing for exports that offer firms free trade conditions and a liberal regulatory environment” ( Madani, 1999). The primary goals of EPZs are; to enhance foreign exchange earnings by promoting non-traditional exports, to provide jobs to alleviate unemployment, to assist in income creation to attract foreign direct investment (FDI) and to produce technological transfer and knowledge spill-over. Thus, EPZs are expected to bring together many employees to serve in the assembly lines of garment and other factories.
The Sri Lankan government introducing this concept as an industrialization strategy in the late 20 th century invited foreign investors to invest in EPZs. Beginning with the Katunayake, the largest EPZ, many others such as Biyagama and Koggala EPZs followed gradually spreading to other parts of the country with the whole country being declared as an industrial zone for foreign direct investments. Among these EPZ factories established 43 % is owned by Multinational Companies (MNCs). There were 126,366 workers (out of which 60% are female workers) in 12 EPZs by the end of 2013 (BOI, 2013).
