Export Processing Zones (EPZs) are designated areas in developing countries where governments offer tax breaks, relaxed regulations, and easy customs to attract foreign companies that manufacture goods for export, a key example of new manufacturing zones in the world economy (EK PSO-7.A.6).
An Export Processing Zone is a fenced-off slice of a country where the normal economic rules don't fully apply. Inside the zone, foreign and domestic companies get tax holidays, fewer regulations, cheap labor, and fast-track customs. The catch is in the name. Almost everything made there has to be exported, not sold locally. Mexico's maquiladoras along the US border are the classic example you'll see on the exam: factories that import parts duty-free, assemble them with low-wage labor, and ship finished goods straight back across the border.
In the CED, EPZs show up in EK PSO-7.A.6 as one of three types of new manufacturing zones created as industry grows outside the core, alongside special economic zones and free-trade zones. They're a direct result of outsourcing and economic restructuring (EK PSO-7.A.5). When core countries deindustrialize, those manufacturing jobs don't disappear. They move to places like EPZs, where developing countries compete for them by offering the lowest costs. That's the international division of labor in action, and it usually means the developing country gets the lower-paying jobs.
EPZs live in Topic 7.7 (Changes as a Result of the World Economy) in Unit 7 and support learning objective 7.7.A, which asks you to explain the causes and geographic consequences of recent economic changes like growing international trade and interdependence. EPZs are the perfect cause-and-effect example. The cause is core-country outsourcing and trade liberalization; the consequence is a new manufacturing landscape in the periphery and an international division of labor where developing countries get the low-wage assembly work. If a question asks you HOW the global economy reshapes places, EPZs are one of your most concrete answers. They also connect Unit 7's development theories to real geography you can point to on a map.
Keep studying AP Human Geography Unit 7
Foreign Direct Investment (FDI) (Unit 7)
EPZs exist to capture FDI. The tax breaks and regulatory exemptions are bait, and the foreign company building a factory inside the zone is the catch. If an FRQ asks how countries attract FDI, EPZs are your go-to example.
Global Supply Chain (Unit 7)
EPZs are individual links in global supply chains. A phone designed in California gets assembled in an EPZ in Asia using parts from a dozen countries. The zone's streamlined customs exist precisely so goods can flow in and out of that chain fast.
Dependency Theory (Unit 7)
EPZs are exhibit A for dependency theorists. The periphery supplies cheap labor, the core keeps the high-value design and profits, and the developing country stays locked into low-wage work. You can use EPZs as evidence for or against this theory in an FRQ.
Trade Liberalization (Unit 7)
EPZs are basically trade liberalization in miniature. Instead of opening the whole economy to free trade at once, a country opens one zone, drops the tariffs and rules there, and tests the waters.
EPZs are tested as part of LO 7.7.A, usually in multiple-choice stems asking you to identify why a country would create one (answer: attract foreign investment and create export-manufacturing jobs) or to explain a consequence (answer: new manufacturing zones outside the core and an international division of labor). Know how to tell EPZs apart from special economic zones and free-trade zones, since the CED lists all three together and MCQs love that distinction. No released FRQ has used the term verbatim, but EPZs fit perfectly as evidence in free-response questions about deindustrialization, outsourcing, or the effects of the global economy on developing countries. Maquiladoras are the named example worth memorizing.
Both offer companies special perks, but the scope differs. An EPZ is narrowly focused on manufacturing goods for export, full stop. An SEZ is broader. It can include EPZ-style factories plus services, finance, retail, and goods sold domestically. Think of an EPZ as one tool and an SEZ as the whole toolbox. China's Shenzhen is an SEZ; Mexico's maquiladora zones function as EPZs. A free-trade zone is a third sibling, focused mainly on duty-free storage and transshipment of goods rather than manufacturing.
Export Processing Zones are designated areas where developing countries offer tax breaks, relaxed regulations, and streamlined customs to attract companies that manufacture goods for export.
The CED groups EPZs with special economic zones and free-trade zones as new manufacturing zones created by the growth of industry outside the core (EK PSO-7.A.6).
EPZs are a direct result of outsourcing and deindustrialization, because manufacturing jobs that leave core regions reappear in newly industrialized countries.
EPZs feed the international division of labor, in which developing countries typically end up with the lower-paying assembly jobs while core countries keep design and management.
Mexico's maquiladoras are the classic named example of EPZ-style manufacturing you can drop into an FRQ.
An EPZ is export-manufacturing only, while a special economic zone is broader and can include services, finance, and domestic sales.
EPZs are designated areas in developing countries where governments offer tax breaks, fewer regulations, and fast customs to attract companies that manufacture goods for export. The CED lists them in EK PSO-7.A.6 as one type of new manufacturing zone created by the global economy.
An EPZ is narrowly focused on manufacturing goods for export, while a special economic zone is broader and can include services, finance, and goods sold in the domestic market. Shenzhen, China is an SEZ; Mexico's maquiladora zones work like EPZs.
Both, and the exam wants you to see both sides. They bring foreign investment, jobs, and economic growth, but the jobs are usually low-wage assembly work, which dependency theorists argue keeps the periphery locked into a subordinate role in the international division of labor.
Essentially yes. Maquiladoras are Mexico's version of EPZ factories, located mostly along the US border, where parts are imported duty-free, assembled with low-cost labor, and exported as finished goods. They're the named example most useful on the AP exam.
To attract foreign direct investment and create manufacturing jobs without opening the entire economy to foreign competition. The tax holidays and relaxed rules apply only inside the zone, so the country can plug into global supply chains on a limited, controlled basis.
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