Industrialization and development in Kenya : the case of export processing zones

Abstract

The lack of industrialization in Sub-Saharan Africa (SS A) is a significant challenge that needs to be addressed in order to achieve long-term sustainable growth and development in the region. Few countries in the world have made significant progress in social and economic development without implementing an effective industrial strategy. Many countries in SSA have created Export Processing Zones (EPZs) in an attempt to address the challenge of industrialization and foster an export oriented manufacturing sector. The Kenyan government's stated objectives of EPZs are to create jobs, diversify and expand exports, increase productive investments, foster technology transfer and create backward linkages between the zones and the domestic economy. This thesis uses the case of EPZs in Kenya to determine if they are meeting these objectives. The thesis argues that in its current form the EPZ program in Kenya is failing to achieve the objectives that it was intended to achieve. Data from the Kenyan EPZs from 2002-2009 shows that there are significant shortcomings in expansion and diversification of exports, linkages between domestic and EPZ firms, and stable full-time job creation. The thesis concludes by offering some recommendations for a more effective industrial strategy that places more emphasis on domestic industry and allows for greater state-led policies to meet economic development objectives.