The adoption of export-led growth strategies by many developing countries, including SA, is directly responsible for the growth of special economic zones, free trade zones and industrial development zones in recent years. Such zones are regarded as key instruments in the array of policies crafted by countries to pursue foreign direct investment , encourage employment,  inspire exports and economic growth, and lastly to improve the transfer of technology and acquisition of skills.

 

The South African version of a free trade zone, Industrial Development Zone (IDZ), is a Government initiative aimed at giving impetus to export-oriented growth in South Africa. With three functional IDZ’s the Government regard IDZs as instruments for expanding and modernising the SA’s economy through additional investment/capital formation, technology transfer and employment generation. Furthermore, IDZ’s are expected to generate multiplier effects upon the rest of the economy.  Currently they are strategically located away from Metros’ (Durban, Cape Town and Johannesburg) and in areas with massive potential for development. The rationale behind the free trade zones’ is to attract export-oriented manufacturing investment by setting aside a physical area where investors will be given a range of incentives. These include benefits such as tax breaks, waivers of industry regulations, exemptions from import and export duties, suspension of rules requiring foreign investors to make investments in conjunction with local partners, strict guarantees against expropriation, assurances of physical security and access to efficient communications and transportation networks.