Export processing zones (EPZs) in Tanzania : impact and influencing factors

Kiria, Joseph Simon

Abstract

This thesis is an attempt to understand the impact of, and factors influencing the outcomes of EPZs in a latecomer context, using Tanzania as a case study. Also, it aims to understand why governments in developing context preserve tax incentives. The analysis in this study works within the context of neoliberal theoretical thinking, and employs multiple research methods, in which, multiple sources of data namely document analysis, questionnaire, semi-structured interviews and direct observation are used. The study first examines the factors which might have hindered Tanzanian EPZ initiative from replicating East Asian success. The results demonstrate that the failure is associated to country’s political and institutional factors relevant in determining strategic planning and implementation of a successful EPZ. The factors include inadequate knowledge about crucial aspects of EPZ development and management, vested interests and conflicting interests between bureaucracies, use of EPZ as a tool for corruption and rent seeking, prevalent anti-FDI sentiment, and adoption of single factory scheme.

The second part explores the impact of governance on investors’ decisions to locate in an EPZ. The results demonstrate that a relationship exists between level of governance in host country and the flow of FDI in EPZs. The results support the perception that poor governance deters FDI inflows.

The last part of the study examines why the use of tax incentives in the Tanzanian EPZ program has remained politically popular and whether there is a rent seeking motive in its application. It also explores whether investors’ location decisions would change if no tax holidays were offered in EPZs. The findings demonstrate that tax incentives have often been motivated by political rather than economic considerations, resulting into rent seeking behaviour. The findings revealed presence of too much political influence of vested interests in the design and implementation of tax incentives policy. The results also demonstrate that absence of tax holidays in EPZs would not result in to disincentive to invest.

Citation

Kiria, J. S. Export processing zones (EPZs) in Tanzania : impact and influencing factors. (Thesis). University of Hull. https://hull-repository.worktribe.com/output/4220466

• Thesis Type: Thesis
• Deposit Date: Jul 27, 2018
• Publicly Available Date: Feb 23, 2023
• Keywords: Business
• Public URL: https://hull-repository.worktribe.com/output/4220466
• Additional Information: Business School, The University of Hull
• Award Date: Sep 1, 2017