Opinion: African SEZs and GVCs In the Age of Automation (1), By Rafiq Raji
Mauritius led the way on SEZs in Sub-Saharan Africa when it set one up in 1971. Since then, many African countries have developed “various forms of special economic zones ”, ranging from “export processing zones , free trade zones , and industrial parks.” With a few exceptions, their performances have thus far not been encouraging.
The World Bank categorises the implementation failures of industrial parks into four. The parks may not be built eventually. If they are built, they could enjoy little custom. In the third category, they could be built and highly subscribed but not yield the expected “cluster effects”. For the fourth category, they could be built, enjoy great custom, produce cluster effects, but have “negative spillovers” and “crowding out” effects.
…Africa’s relatively cheap labour, or that of any other jurisdiction for that matter, may cease to be an advantage over time. This is because industry may have advanced beyond the need for much labour by the time emerging Asian countries – which in tandem with China currently dominate labour-intensive GVCs – mature.
Industry 4.0 labour saving technologies – “the Internet of Things, advanced robotics, and 3D printing” – are reducing the differentiation role of wages in the production process. Consequently, Africa’s relatively cheap labour, or that of any other jurisdiction for that matter, may cease to be an advantage over time.
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