Regional development and rural-based export processing zones in developing countries

Many empirical, descriptive and theoretical studies have revealed various aspects of export processing zones (EPZs), but little attention has been given to the issue of the location of EPZs. In this paper, we provide a new theoretical approach to it: a general equilibrium model that consists of two regions and makes possible a comparison between the economic effects of an expansion of an EPZ in the rural region and that of multinational corporations (MNCs) in the urban region. The result is interesting: expanding the EPZ in the rural region may be a less desirable policy for a developing country than expanding the MNC sector in the urban region.