What Is an Export Processing Zone?

Export processing zones, abbreviated as EPZ, are usually set up by governments of developing nations to encourage industrial and commercial economic export activity; they are a type of free-trade zone. Traders are typically exempt from certain taxes and other business regulations, according to The World Bank.

These sites are developed to create jobs and generate income for a developing country; they are designed to attract direct investment from foreign institutions in order to improve technology and to enhance the intellectual capital and skills of the country's indigenous workforce. They work by removing layers of bureaucracy or ensuring that permits and licenses are easy to obtain. These areas are sometimes referred to as development economic zones or special economic zones, in addition to export processing zones.