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Chapter 5: Findings – Presentation and

Analysis

5.1 Findings – Presentation and Analysis

The literature reviewed and the data collected in this project, using a

qualitative and quantitative research approach, are presented and analyzed in

the following discussions. The assessment of findings is designed to

answer the main research question: What are the purpose and the importance

of the EPZ program in the Belizean economy?

The examination of the literature review and the data collected also answers

the following subordinate questions:

1. How have EPZ evolved in Belize?

2. What areas of the Belizean economy are impacted by the EPZ

program?

3. What factors within the EPZ program influences its impact on the

Belizean Economy?

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5.2 Presentation of Findings related to each Subordinate

Question

Question 1

5.2.1 How have EPZ evolved in Belize?

In answering this question the EPZ legislation’s development will be reflected

upon along with the EPZ program’s development related to designated

companies, industry composition, ownership, location of companies, and

status of companies.

5.2.1.1 Evolution of the EPZ Program

5.2.1.1.1 Evolution of the EPZ Act

The EPZ Act of 1990 provided for the establishment and operation of EPZ

within Belize to promote economic growth and development, to stimulate new

investment, and to create new employment opportunities. (EPZ Act, 1990)

Unfortunately the original EPZ Act did not contain provisions that

encompassed “stand alone” EPZ, Special EPZ, which would be able to

operate independently outside an EPZ Developer. This independent

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operation was required for companies in Aquaculture, Agro-Processing and

Manufacturing to effectively and efficiently utilize the country’s raw materials.

The EPZ Act of 1990 only provided for the operations of EPZ Developers to be

established to administer an EPZ and for an EPZ Business to operate within

an EPZ Developer. (EPZ Act 1990) This aspect of the EPZ Act should have

provided a clustering effect of companies operating within designated large

industrial areas thereby attaining economies of scale. Conversely there was

only one EPZ Designation, an EPZ Developer, in the program from the

introduction of the Act in 1990 to its first amendment in 1994. (Table 3 and

Figure 3)

Table 3Annual Designation and Industry (1992 – 2003)

Year Industry

EPZ

Developer Aquaculture Data-Processing Manufacturing Agro-Processing Other TOTAL

Y

%

1992 1 0 0 0 0 0 1

1993 0 0 0 0 0 0 0

1994 0 0 0 0 0 0 0

1995 0 0 1 1 0 0 2

1996 0 1 0 0 0 0 1

1997 0 3 0 0 0 0 3

1998 0 2 0 0 3 0 5

1999 1 1 5 0 2 0 9

2000 3 6 16 2 2 0 29

2001 0 2 12 2 0 0 16

2002 0 3 12 1 1 4 21

2003 2 1 14 1 2 4 24

TOTAL 7 19 60 7 10 8 111

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Industry

% 6.3 17.1 54.1 6.3 9 7.2 100

Figure 3

Annual Designation and Industry (1992 – 2003)

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0

2

4

6

8

10

12

14

16

18

19921994

19961998

20002002

Year

Number of companie

s

EPZ Developer

Acquaculture

Data-Processing

Manufacturing

Agro-Processing

Other

S

ource: Ministry of Finance (2003)

The implemented clustering policy was clearly unsuccessful to the extent that

no EPZ Business obtained designation during the first four (4) years of the

program.

The amendments to the legislation in 1994 provided investors with the added

option of attaining EPZ status for a single business and its facilities, a Special

EPZ (EPZ Act 1994). In effect a single Special EPZ firm represented its own

EPZ Business and EPZ Developer in one. These “stand alone’, Special EPZ

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designations increased from zero (0) in 1994 to two (2) in 1995 to thirteen (13)

in 1999 to thirty eighth (38) by 2003. (Table 4 and Figure 4)

Table 4

Annual Designation and Type (1992 – 2003)

Year Type

Developer Business Special TOTAL

1992 1 0 0 1

1993 0 0 0 0

1994 0 0 0 0

1995 0 0 2 2

1996 0 0 1 1

1997 0 0 3 3

1998 0 1 4 5

1999 1 5 3 9

2000 3 17 9 29

2001 0 12 4 16

2002 0 14 7 21

2003 2 17 5 24

TOTAL 7 66 38 111Type % 6.3 59.5 34.2 100

Figure 4

Annual Designation and Type (1992 – 2003)

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0

2

4

6

8

10

1214

16

18

1992

1994

1996

1998

2000

2002

Year of Designation

Number of Companies

Developer

Business

Special

So

urce: Ministry of Finance (2004) These thirty eight (38) Special EPZ designations were widely distributed in

Aquaculture, Data-Processing, Manufacturing, Agro-Processing and Other

industries (Table 5 and Figure 5)

Table 5

Industry and Type

Industry Type

Developer Business Special TOTAL

Aquaculture 0 0 19 19

Data-Processing 0 59 1 60

Manufacturing 0 5 2 7

Agro-Processing 0 1 9 10

Other 0 1 6 8

Developer 7 0 0 7

TOTAL 7 66 38 111

Type % 6.3 59.5 34.2 100

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Figure 5

Industry and Type

0

10

20

30

40

50

60

70

Developer Business Special

Designation Type

N

umber of Companies

Acquaculture

Data-Processing

Manufacturing

Agro=Processing

Other

Developer

Sour

ce: Ministry of Finance (2004)

The 1994 amendments therefore marked the commencements of the EPZ

program in respect to companies operating. From 1995 to 1997, all six (6)

designated EPZ were Special EPZ. (Table 3 and Figure 3) These

companies obtained designations in Manufacturing (Garment), one (1),

Data-Processing, one (1), and Aquaculture, four (4). (Table 5 and Figure 4)

Other amendments made in 1994 included an increase in the number of

members on the EPZC from eight to ten and expanding the membership by

including the Belize Chamber of Commerce, the Small Business Sector, the

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Industrial Sector, the EPZ Developers and the EPZ Businesses. Also there

was a decentralization of power from the Minister under whose portfolio the

program falls to the EPZC.

The Honorable Ralph Fonseca, 2004, Minister of Finance, in his 2004-2005

Budget Speech, Rebalancing Growth to Work for all Belizeans, informed that

rebalancing tax measures and monetary policy, specifically, immediate

amendments to the EPZ Act, would lead to the effective administration of EPZ

legislation disallowing any exemptions on fuel not used for energy generation

or vehicles not directly involved with production, disallowing transactions in

Belize Dollars and increasing the fines an penalties for violations respectively.

5.2.1.2 Analysis of the Evolution of the EPZ Act

The EPZ Act of 1990 represented the government opting to implement the

EPZ program geared solely towards an industrial clustering effect of gathering

companies to operate within an enclave environment. Governments can

better control the impact of the fenced off zones on the regional and national

economy (Madani, 1999). For instance, some of the early Chinese SEZs

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were designed as enclaves or “laboratories” where capitalist ideas, working

relationships and dynamics are evaluated before potential propagation into the

rest of the economy (Madani, 1999). The enclave system was designed

solely to generate static benefits such as employment and foreign exchange

earnings (Baissac, 2003) The impact of fenced-off zones are limited to the

immediate region where they are located and their locational limitation

reduces the opportunities for knowledge and technological spill-over, thus

diminishing the chances of continued contribution to economic growth (Madani,

1999) The 1994 amendment reflected a change in policy toward the new

vibrant form of EPZ. This new paradigm of EPZ was recognized as dynamic,

investment-intensive, management driven, enabling and integrating (Haywood,

2000) The success of Mauritius, Dominican Republican and Jamaican EPZ

highlights the importance of allowing geographical diversity and EPZ (Madani,

1999). This approach has been so rewarding that both Mauritian and

Dominican Republican economies have been described as highly dynamic,

and as “one big EPZ”.

The added diversity of the EPZC members and the expansion of the EPZC

provided for greater participation, authority and responsibility in the program

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by the stakeholders of the program. EPZ property developers, owners and

managers, EPZ operators, labor representatives, and government officials in

charge of regulation and administration of the EPZ regime should work closely

together on EPZ development strategy and policy (Baissac, 2003).

The amendments that strengthened the regulatory framework, and clarified

imports, provided a sound basis for the EPZ authority to continue effectively

administering the program.

The analysis of the legislation’s evolution reveals that the EPZ program has

advance legislatively from the static enclave type to recognizing the new

dynamic, enabling zone paradigm of an integrated economic development

tool.

5.2.1.3 The Evolution of EPZ Designations

In reference to designation, Belize’s EPZ program has experienced significant

development. The program initially experienced slow growth from the

passing of the EPZ legislation in 1990 to the designation of only one (1) EPZ

Developer in 1992. (Table 3 and Figure 3) From 1992 to 1994 the program

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experienced a stagnant period until the original act of 1990 was amended to

make provisions for Special EPZ and the decentralization of the government’s

authority to the EPZC which was also expanded to reflect a cross section of

the major stakeholders of the program. The period of 1995 to 1997 the

program was immediately expanded by six (6) new Special EPZ in the

Manufacturing, Data-Processing and Aquaculture industries. (Table 3 and

Figure 3) 1999 marked the commencement of a surge of Data-Processing

EPZ Businesses into the program which totaled fifty nine (59) and represented

fifty four point one (54.1) percent of the total designated companies in the

program as at the end of 2003. (Table 3 and Figure 3) The line of businesses

of the designated Data-Processing EPZ Businesses include General Data

Entry, Professional Managerial Service, Telephone and Internet Gaming,

Customer Services, Telemarketing, Travel Reservations, Credit Card

Payments, E-commerce, Web Hosting and Software Development. (Table 1)

Simultaneously with the surge of Data-Processing EPZ Businesses there was

an increase in the number and the diversity of the Special EPZ. The program

developed from one (1) EPZ Developer with no EPZ Businesses in operation

and two (2) Special EPZ during the period of 1990 to 1995 in to a program that

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has expanded to encompass Agro-Processing and Other industries as of 2003.

(Table 3 and Figure 2) Aquaculture has expanded to include Post Larvae

Cultivation, Shrimp and Tilapia Fish Cultivation and Processing. (Table 1)

Manufacturing has expanded to encompass the Production of Stone Tiles and

Slabs, Garment, Veneer, Plywood, Building Panels, Furniture, Marimba Bars

and Xylophone Bars. (Table 1) Organic Rice, Honey, Fruits and Vegetables

Dehydration and Packaging, Orange and Grapefruit Concentrates, Essential

Oils, Bamboo Shoot Cultivation and Processing are all merged into

Agro-Processing. (Table 1) Other comprises of Movie Production, Medical

Education, Casino and Pharmaceutical.

Fonseca, 2004, informed that the cruise ship and tourism entities currently

operating in Belize have been signaled that they may be granted EPZ status

pending significant investments and employment on their behalf.

5.1.2.3 DataPro e-Business & Free Zone

DataPro e-Business Park is a private sector designated EPZ Developer in the

EPZ program. Data Pro e-Business Park offers state-of-the-art office space,

communications, and ancillary services tailored to the needs of companies that

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wish to take advantage of the unique e-business opportunities created by the

fusion of a Free Trade Export Processing Zone, traditional offshore financial

services, and the latest information Technologies (DataPro, 2003).

5.1.2.4 State of the art Office Complex

DataPro e-Business park’s build-to-suit executive office interiors range in size

from one thousand (1,000) to ten thousand (10,000) square feet (DataPro,

2004) All buildings are equipped with all the necessary utilities such as

electricity, water, air conditioning, and are pre-installed with fiber optic cable

throughout. Offices are situated in an access restricted twenty four (24) hour,

guard-gated compound (DataPro, 2004).

5.2.1.5 Communication Services

DataPro e-Business Park, in partnership with Gemini Communications, offers

the finest competitively priced high-speed data communications in the region.

Bandwidth is supplied in dedicated lines that range from a 64K line, to an E-1

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connection. Gemini also offers discount long-distance, 1-800 number

telephone services, and full-service call centre installations (DataPro, 2004).

5.2.1.6 Ancillary Services

Through its strategic partners, DataPro e-Business Park offers a wide range of

ancillary services such as incorporation on International Business Companies,

Internet Gaming turnkey packages and other legal services (DataPro, 2004).

5.2.1.7 Free Zone

In addition to operating in a hi-tech office compound, businesses pay no

income tax, no capital gains tax, and no sales or value added tax. All

equipment including service and utility vehicles and office furniture are free of

custom duties and any other tax (DataPro, 2004).

DataPro e-Business Park epitomizes Belize’s EPZ program as it represents

the private sector led diversification and paradigm shift of not only EPZ in

Belize, but also that of the wider Belizean economy. DataPro e-Business

Park was designed and built from the ground up with the information Economy

enterprises in mind (DataPro, 2004).

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DataPro e-Business Park carries out its own marketing and promotion in

attracting local and international clients. The surge in Data-Processing

designations and inactivity is as a result of the Data-Processing EPZ

Developer building up its private sector led development in Data-Processing.

These inactive companies represent shell companies which are held by the

Developer and marketed to local and international investors as part of their

ground up, turnkey packages. The park attracts mainly technology

companies that wish to expand or relocate their operations to a secure and

stable offshore location that offers exceptionally attractive fiscal incentives,

security, and privacy (DataPro, 2004). DataPro e-Business Park is the

region’s premiere infrastructure provider for enterprises with mission-critical,

offshore e-Business operations (DataPro, 2004)

5.2.1.8 Analysis of Evolution of Designations

The program has evolved from one that was initially epitomized by a garment

company, which characterizes the static enclave type of EPZ programs of the

past, to a program that is dynamic and filled with vigor; great private sector led

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sustainable development prospective and is in constant transformation. (Table

1)

5.2.1.9 Evolution of EPZ Ownership

The program has investors from North America (American and Canada), Asia

(Taiwan and Korea), Latin America (Panama) and Belize. The program has

had an increase in Belizean investors, an introduction of Joint Ventures, and

an introduction of Asian investors since 1999. (Table 6 and Figure 6)

Table 6

Annual Designation and Ownership (1992 – 2003)

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Year Ownership Nationality

Belizean

Joint

Ventures American Taiwanese Koreans Canadian Panamanian TOTAL

1992 1 0 0 0 0 0 0 1

1993 0 0 0 0 0 0 0 0

1994 0 0 0 0 0 0 0 0

1995 1 0 1 0 0 0 0 2

1996 1 0 0 0 0 0 0 1

1997 3 0 0 0 0 0 0 3

1998 3 0 2 0 0 0 0 5

1999 7 1 1 0 0 0 0 9

2000 19 2 4 3 1 0 0 29

2001 14 0 1 1 0 0 0 16

2002 13 1 5 0 0 1 1 21

2003 16 1 6 0 0 1 0 24

TOTAL 78 5 20 4 1 2 1 111

Ownership

% 703 4.5 18 3.6 0.9 0.18 0.9 100

Figure 6

Annual Designation and Ownership (Detail on Foreign) (1999 – 2003)

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0

2

4

6

8

10

12

14

16

18

20

19921994

19961998

20002002

Year of Designation

Number of Companie

sBelizeanJoint Ventures

American

Taiwanese

Koreans

Canadian

Panamainian

Source: Ministry of Finance (2004)

The concentration of the designated ownership is by Belizeans. The only

other significant ownership in terms of number of designated companies is

American. (Table 6 and Figure 6)

The program is dominated with Belizean and American ownership and this is

further characterized by only these two groups having designations in all six

industries. (Table 7 and Figure 7)

Table 7

Ownership and Industry

Industry Ownership

Belizean

Joint

Venture American Taiwanese Korean Canadian Panamanian TOTAL

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Aquaculture 10 3 5 1 0 0 0 19

Data Processing 53 0 6 0 0 1 0 60

Manufacturing 1 1 2 2 1 0 0 7

Agro-Processing 6 1 1 1 0 1 0 10

EPZ Developer 6 0 1 0 0 0 0 7

Other 2 0 5 0 0 0 1 8

TOTAL 78 5 20 4 1 2 1 111

Figure 7

Ownership and Industry

0

10

20

30

40

50

60

Acq u

aculture

Data-P

rocessing

Manufacturin

g

Ag ro

-Processing

EP

Z Developer

Other

Industry

Number of Companie

s

Belizean

Joint Venture

American

Taiwanese

Korean

Canadian

Panamanian


Belizean designations are concentrated in the Data-Processing industry.

(Table 5 and Figure 5)

5.2.1.10 Analysis of Evolution of EPZ Ownership

The program has evolved from the presence of Belizean and American

investors in its commencement to now including investors from Canada,

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Taiwan, Panama and Korea that have not only added to the ownership and

export diversity of the Belizean economy but more so to its diversity in

knowledge, management and supervisory techniques and culture. The data

presents that there is a wide range of ownership, Belizean, American,

Taiwanese, Korean, Canadian and Panamanian. The ownership of

companies in the program also reflects high participation from Belizean

companies. Jayanthakumaran, 2003, in her benefit-cost appraisal of EPZ in

South Korea, Malaysia, Sri Lanka, China, Indonesia, and the Philippines,

concludes that a heavy reliance on foreign investors is unlikely to maximize

the welfare of citizens and that there should be a balance between domestic

and foreign investment. The high number of Belizean companies may

provide an important source of benefit to the economy through their domestic

profits. In reference to Jayanthakumaran argument, it is essential that the

program increases its foreign investment in order to attain a balance.

5.2.1.11 EPZ Location Evolution

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Belize is divided into six (6) districts; Corozal and Orange Walk, north, Belize,

central/east, Cayo, west, and Stann Creek and Toledo, south. (Figure 6)

Belize’s barrier reef, which is 185 miles long, is the longest in the Western

Hemisphere. Its cays are located between the mainland and the barrier reef,

on the barrier reef, and on or within the barrier reef perimeters of the offshore

atolls. The northern half of the mainland of Belize is a plain and has large

areas of table land. The land is covered with a thin layer of soil, which

supports scrub vegetation and dense hardwood tropical forest. The coastal

area is neither land nor sea, but a sodden, swampy transition between the two.

It consists of mangrove and grasses, and is bordered by tussock grasses,

cypress, and sycamore where the land separates the water. The central part of

Belize consists of sandy soil that supports large savannas. Approximately thirty

miles southwest of Belize City, the land begins to rise dramatically to between

1,500 and 3,680 feet above sea level into the Mountain Pine Ridge Area and

the Maya Mountains. Abundant rainfall runs off the northwest from the

highlands in a number of streams. The southern part of Belize, with its

watershed to the southeast from the Maya Mountains, consists of short rivers

that rush through slopes combed with overhanging ledges and caves. The

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rivers, carrying sand, clay and silt, have enriched the coastal belt over the years,

allowing Belize to develop significant agricultural products such as citrus and

bananas. Along with an annual rainfall of some 170 inches, southern Belize has

a true tropical rain forest that is rich with ferns, palms, lianas, and tropical

hardwoods.

(Belize Tourism Board, 2004)

Figure 8

Map of Belize by Districts

Source: Belize Tourism Board (2004)

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The south which is characterized by enriched soil has mainly Agro-Processing

and Aquaculture EPZ activities; the west is characterized by savannahs and

mountains has mainly Manufacturing and Agro-Processing EPZ activities,

Belize district is characterized by Data-Processing, and the which is

characterized by north is characterized by table land has mainly Other EPZ

activities. (Table 9 and Figure 10)

The program has grown in reference to EPZ locations from one (1) in the

northern district of Corozal in 1992 to four (4) of the other five (5) districts.

(Table 8 and Figure 9) There has been no EPZ designation in Orange Walk.

Table 8

Annual Designation and Location (1992 – 2003)

Year District

Corozal

Orange

Walk Belize Cayo

Stann

Creek Toledo TOTAL

1992 1 0 0 0 0 0 1

1993 0 0 0 0 0 0 0

1994 0 0 0 0 0 0 0

1995 0 0 2 0 0 0 2

1996 0 0 0 0 0 1 1

1997 0 0 1 0 2 0 3

1998 1 0 1 1 1 1 5

1999 0 0 6 0 3 0 9

2000 3 0 18 3 4 1 29

2001 0 0 13 2 1 0 16

2002 3 0 12 3 3 0 21

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2003 2 0 20 1 1 0 24

TOTAL 10 0 73 10 15 3 111

District % 8.1 0 65.8 9 15.3 0.18 100

Figure 9

Annual Designation and Location (1992 – 2003)

0

5

10

15

20

25

19921994

19961998

20002002

Year

Number of Companie Corozal

Orange Wlak

Belize

Cayo

Stann Creek

Toledo

S

ource: Ministry of Finance (2004)

The surge of designations since 1999 has been based in the Belize district,

sixty five (65.8) percent of total designations and this has been in

Data-Processing by Belizean investors. (Table 9 and Table 10)

Table 9

Location and Industry

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Industry District

Corozal

Orange

Walk Belize Cayo

Stann

Creek Toledo TOTAL

Aquaculture 0 0 4 2 9 3 18Data-Processing 0 0 60 0 0 0 60

Manufacturing 1 0 2 4 0 0 7

Agro-Processing 2 0 0 3 5 0 10

EPZ Developer 3 0 4 0 0 0 7

Other 4 0 3 1 1 0 9

TOTAL 10 0 73 10 15 3 111

Figure 10

Location and Industry

0

10

20

30

40

50

60

70

Corozal

Orang e Wlak

Belize

Cayo

Stann Cre

ek

Toledo

Industries

Number of Compan

ies

Acquaculture

Data-Processing

Manufacturing

Agro-Processing

EPZ Developer

Other


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5.2.1.12 Analysis of EPZ Location Evolution

Mandani, 1999, insists that EPZ would not flourish unless they were fitted with

easy access to sea ports or airports, energy and water sources, good roads,

above average (by country standards) communication facilities and available

and adequately skilled workers. He explained that in 1973 the Bataan Zone

in the Philippines, located in a mountainous area some one hundred and sixty

(160) kilo meters from Manila, despite the government spending nearly US

$200 was a prime example of a poor location, which failed to reach its goals

due to it isolation from the country’s industrial center and poor infrastructure.

The same occurred to the Puerto Limon zone on Costa Rica’s

Atlantic/Caribbean cost and the Zone Franche d’Inga in Zaire.

In line with Mandani’s observations, the low number of companies in the

southern district of Toledo, the poorest district of the country, and the high

density of companies designated in Belize, the economic center of the country,

was not only inevitable, but it also increases the effectiveness of the program.

(Table 8 and Figure 9)

5.2.1.13 EPZ Status Evolution

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The program has fifty three (53) active companies and fifty eight (58) inactive

companies. (Table 10 and Figure 9) The annual surge in Data-Processing

EPZ Business designations since 1999 has been nullified by an increase in

inactivity of designated EPZ. This inactivity is mainly found in the

Data-Processing designated EPZ Businesses. (Table 11 and Figure 12)

Table 10

Annual Designation and Status (1992 – 2003)

Year Status

Active Inactive TOTAL

1992 1 0 1

1993 0 0 0

1994 0 0 0

1995 1 1 2

1996 1 0 1

1997 3 0 3

1998 5 0 5

1999 6 3 9

2000 15 14 29

2001 7 9 16

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2002 9 12 21

2003 5 19 24

TOTAL 53 58 111

Status % 47.7 52.3 100

Figure 11

Annual Designation and Status (1992 – 2003)

0

5

10

15

20

2530

35

19921993

19941995

19961997

19981999

20002001

20022003

Year

Number of Companies

Active

Inactive

TOTAL

So

urce: Ministry of Finance (2004)

Data-Processing and Aquaculture have the same number of active companies,

seventeen (17), which are also the most operational companies in the six (6)

industries of the program. (Table 11 and Figure 11) However, in terms of

inactive companies Data-Processing outweighs Aquaculture by forty three (43)

to two (2). (Table 11 and Figure 12) Data -Processing accounts for forty

three (43) of the fifty eight (58) inactive companies (Table 11 and Figure 11)

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Table 11

Industry and Status

Industry Status

Active Inactive Total

Aquaculture 17 2 19

Data-Processing 17 43 60

Manufacturing 5 2 7

Agro-Processing 7 3 10

EPZ Developer 3 4 7

Other 4 4 8

TOTAL 53 58 111

Figure 12

Industry and Status

05

1015202530

35404550

Acq uacultu

re

Data-Processin

Manufacturing

Ag ro-P

rocessing

EPZ Developer

Other

Industry

NUmber of Co

mpanie

Active

Inactive


Of the total one hundred and eleven 111 designated companies fifty three (53)

are active and fifty eight (58) are inactive. (Table 10) Belizean designated

companies have the most number of active companies in the program, thirty

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(30), on the other hand, this group also accounts for forty eight (48) of the fifty

eight (58) inactive companies. (Table 12 and Figure 12) The Panamanian

designated company and the two (2) Canadian designated companies are all

inactive. (Table 13 and Figure 14) The only designated Korean company is

active. Of the three (3) designated Taiwanese companies only one is active.

(Table 12 and Figure 12) American investors account for seventeen (17)

active companies and 3 inactive companies. (Table 12 and Figure 13)

Table 12

Ownership and Status

Ownership StatusActive Inactive TOTAL

Belizean 30 48 78

Joint

Venture 4 1 5

American 17 3 20

Taiwanese 1 3 4

Korean 1 0 1

Canadian 0 2 2

Panamanian 0 1 1

TOTAL 53 58 111

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Figure 13

Ownership and Status

0

10

20

30

40

50

60

Belizean

Joint Ventur

e

American

Taiwanese Korean

Canadian

Panamania

n

Ownership

Number of Companies

Active

Inactive

So


The Belize district has the most number of active companies in the program,

twenty five (25) of fifty three (53); conversely it also contained the majority of

inactive companies, forty eight (48) of fifty eight (58). (Table 13 and Figure 12)

In the two southern districts of Stann Creek and Toledo all companies that had

been designated were operating. In Cayo, seven (7) of the designated

eleven (11) companies were operational. (Table 13 and Figure 12) Corozal,

along with Belize, is the only district that had more inactive companies than

active; four (4) companies were active and six (6) were inactive. (Table 13 and

Figure 14)

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Table 13

Location and Status

Status Location

Corozal

Orange

Walk Belize Cayo

Stann

Creek Toledo TOTAL

Active 4 0 25 7 14 3 53

Inactive 6 0 48 4 0 0 58

TOTAL 10 0 73 11 14 3 111

Figure 14

Location and Status

0

10

20

30

40

50

60

Corozal Orange

Wlak

Belize Cayo Stann

Creek

Toledo

District

Number of Companie

Active

Inactive

So


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The data reflects a recent surge in the designation of Data-Processing

companies which has been nullified with the inactivity of these companies.

This surge is characterized by Belizean investors concentrated in the Belize

district. The surge in Data-Processing designations and inactivity is as a

result of the Data-Processing EPZ Developer building up its private sector led

development in Data-Processing. These inactive companies represent shell

companies which are held by the Developer and marketed to local and

international investors as part of their ground up, turnkey packages.

5.2.1.14 Summary of Analysis of EPZ Evolution

The data affirms that the EPZ program has evolved positively in relation to its

legislative aspects. The legislation was amended to expand from the static

zones that use solely imported materials to one that allows for designations to

resource specific areas like the shrimp farms in the emerging Aquaculture

industry, the citrus processing in the Agro-Processing industry and the use of a

rock quarry to produce stone tiles and slabs in Manufacturing. The legislation

also evolved to include the major stakeholders in the program in the

development of strategy and policy of the program by expanding the EPZC.

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In contrast, regional development for the least developed areas of the country

has not evolved.

This affirms the theory that EPZ programs should seek to foster economic

concentration around well developed urban centers so as to attract the best

layers of domestic capital, the most educated and productive labor, and

provide accessibility to urban infrastructure and amenities to investors. To

be an effective economic tool the scheme should not seek to achieve regional

development objectives. Instead for the program to be successful there must

be a centrality and economies of scale should obviously be balanced against

issues such as urban congestion, pollution, environmental degradation,

accessibility to labor, and quality of life for labor. (Baissac, 2003)

In terms of ownership, the program is diverse, though the diversity does not

represent a large number of companies. Belizean investors have played a

critical role in the program’s development. However it is necessary for the

further development of the program that the foreign investors increase, which

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will lead to an increase in foreign capital, transfer of technology, skill,

developmental and catalytical effects.

The presence of Data-Processing companies illustrates the technological

advancement of the program in terms of diversifying from the labor intensive

sectors to more capital and skill intensive sectors.

Question 2

5.3.1 What areas of the Belizean economy are impacted by

the EPZ program?

The program’s impact on the economy was analyzed by presenting economic

indicators of the program in terms of employment, investment, and trade.

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These economic indicators were compared to parallel economic indicators in

the economy. EPZ knowledge transfer will also be presented.

Before reviewing the impact of EPZ on the Belizean economy it is essential to

gain an over view of the country in relation to EPZ operations. This review will

be carried out on human development, poverty, GDP growth, and GDP factors.

5.3.2.1 Human Development

Belize ranked sixty seven (67), out of the 175 countries, on the UNDP’s 2003

Human Development Index which measures a country’s achievement in terms

of life expectancy, educational attainment and adjusted real income. Belize’s

position places it high in the Medium human development ranking. (Table 14)

Belize is geographically, historically, culturally, politically a part of both the

Caribbean and Central America as it is a member of the Caribbean’s

CARICOM and the Central American’s SICA.

Both regions’ ranking in the global human development report 2003 are

classified by having a few countries being ranked high and all the other

countries falling under medium ranking. (Table 15 and Table 16)) In terms of

the Caribbean Haiti falls under low human development. In both the

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Caribbean and Central American regions Belize falls in the middle of the

region specific ranking. (Table 15 and Table 16)

Table 14

Summary of Human Development Index 2003

World

Rank High HD (1-55)

1 Norway

2 Iceland

3 Sweden

4 Australia

5 Netherlands

Medium HD

(56-141)

67 Belize

84 Paraguay

85 Philippines

86 Maldives87 Turkmenistan

Low HD

(142-175)

171 Burundi

172 Mali

173 Burkina Faso

174 Niger

175 Sierra Leone

Source: UNDP (2004)

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Table 15

Caribbean’s in the Human Development Index 2003

Caribbean

Rank

World

Rank High HD

1 27 Barbados

2 49 Bahamas

3 51 St. Kitts & Nevis

4 52 Cuba

Medium HD

5 56 Antigua & Barbuda

6 67 Belize

7 68 Dominica

8 71 Saint Lucia

9 78 Jamaica

10 80

St Vincent &

Grenadines

11 93 Grenada

12 94 Dominican Republic

Low HD13 150 Haiti

Source: UNDP, 2004

Table 16

Central America in the Human Development Index 2003

Central

American

Rank

World

Rank High HD

1 42 Costa Rica

2 55 Mexico

Medium

HD

3 59 Panama

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4 67 Belize

5 105

El

Salvador

6 115 Honduras

7 119 Guatemala

8 121 Nicaragua

Low HD

Source: UNDP, 2003

5.3.2.2 Gross Domestic Product

5.3.2.2.1 Gross Domestic Product Annual Growth Rate

The industries that are represented by companies in the EPZ program

contribute greatly to Belize GDP growth rate.

Belize’s GDP growth rate has been cyclical. (Figure 15) The period from the

mid 1990s, commencement of EPZ operations to 2000 reflected a general

growth in GDP. 2001 and 2002 reflected a down turn which is attributed to a

general downturn in the global economy and naturally occurring cyclical

downturn and particularly to natural disasters (CARICOM, 2003). The

country’s economy, particularly the primary sector, was affected by hurricanes

Keith, October 2000, Chantal August 2001, and Iris October 2001 and the

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shrimp industry was affected by the Taura virus which led to less production

(CARICOM, 2003). In 2003 the cyclical growth which characterizes Belize’s

annual GDP growth rate commenced. The GDP growth for 2003, four point

nine (9) percent, was driven by increased activities in the tourism, banana and

shrimp industries (Fonseca, 2004). Fonseca elaborated that the Belizean

economy has averaged seven (7) percent GDP growth from 1998 to 2003,

which is the highest in the region.

Figure 15Gross Domestic Product Annual Growth Rate (1961 to 2003)

-4

-2

0

2

4

6

8

10

12

14

1961

1965

1969

1973

1977

1981

1985

1989

1993

1997

2001

Year

GDP GDP annual growth

rate

Source: Earth Trends, 2004

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5.3.2.2.2 Gross Domestic Product by Activity

Belize’s GDP is greatly influenced by the EPZ program. The EPZ program’s

Aquaculture industry has increased its percentage contribution to GDP through

Fishing, and the Manufacturing industry, stone tile and slab production, is

projected to increase the Belize’s GDP through Mining and Quarrying. The

decline in percentage contribution to GDP is a direct result of the decrease in

EPZ production of Manufacturing, garment production.

Belize’s GDP is characterized by percentage contribution as follows, the

Tertiary industries, the Secondary industries, and the Primary industries,

respectively. Since the commencement of EPZ operations, in reference to

industry percentage contributions to GDP, there has been a three point six (3.6)

increase in Tertiary industries, a two point one (2.1) decrease in Secondary

industries, and a zero point five (0.5) decrease in Primary industries. (Table

17)

Closer analysis of the relatively small decrease in the Primary industries’

percentage contribution to GDP reveals that Agriculture’s contribution has

been the only area of decrease, from twelve point four (12.4) in 1994 to nine

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point two (9.2) in 2003; Fishing has been the only area of increase its

contribution, from two point two (2.2) in 1994 to five (5.0) in 2003, and Mining

and Quarrying has remained constant at zero point five (0.5). (Table 16) The

EPZ program has contributed to this surge in Fishing through its Aquaculture

industry, which accounts for a majority of the Fishing industry with its farmed

shrimp produce. The EPZ program is also projected to increase the Mining

and Quarrying percentage contribution to GDP by increasing the utilization of

local raw materials as a result of the Korean company that has commenced

operations in the Manufacturing industry producing stone tiles and slabs by

quarry rocks in the Cayo district. (Table 1, Table 6 and Table 9)

The percentage contribution to GDP of Manufacturing of Textiles, Clothing and

Footwear has been cut in half from 1994 to 2003, one point two (1.2) to zero

point six (0.6). This decreased is a result of the scaling down of productions

of garments in the EPZ’s manufacturing sector, particularly the American

garment company in the EPZ Manufacturing industry. This reflects

restructuring of global production as a result of the global decline in the global

economy. As the productivity of Manufacturing, garment, decreases the

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productivity of the other sectors, Aquaculture, Agro-Processing,

Data-processing, and Other, have been increasing.

Table 17

Gross Domestic Product by Activity, current prices – contribution to

GDP in percent

Activity Year

1994 1997 2000 2003

Agriculture & Forestry 12.4 12.5 11.1 9.2

Fishing 2.2 2.4 3.7 5.0

Mining & quarrying 0.5 0.5 0.5 0.5

Primary Industries 15.1 15.4 15.4 14.6

Manufacturing 9.7 9.6 9.6 8.2

Man. Food products 6.9 7.3 7.7 6.4

Man. of textiles 1.2 1.1 0.9 0.6

Man. Other 1.7 1.3 1.0 1.1Electricity & water 3.1 3.4 3.4 3.1

Construction 4.4 4.0 5.0 3.9

Secondary Industries 17.3 17.0 18.0 15.2

Wholesale & retail trade, repairs 15.5 15.3 16.3 16.0

Hotels and restaurants 3.3 3.1 3.5 4.0

Transport and communication 8.8 8.4 8.5 9.3

Financial Intermediation 3.1 4.5 6.5 6.5

Real estate, renting and business services 6.3 7.0 5.9 7.0

Community, social and personal services 7.0 6.8 6.1 6.1

General government service 11.4 10.5 9.9 10.3

Tertiary Industries 55.5 55.6 56.6 59.1

Less: Financial services indirectly

measured 1.3 2.1 2.5 2.7

All at industries at basic prices 86.5 85.9 87.5 86.2

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Taxes less subsidies on products 13.5 14.1 12.5 13.8

GDP at market prices 100.0 100.0 100.0 100.0

Source: Central Statistical Office, Belize, 2004

5.3.2.3.1 Poverty

5.3.2.3.2 Poverty Gap by District

The EPZ program does not develop the least developed areas of Belize in

comparison with the more developed areas. The program maximizes the use

and efficiency of the areas with the best factors of production in Belize.

The poverty gap measures the aggregate disparity in the incomes of the poor

compared to the poverty line, which compares the monetary value of the

minimum food and non-food items that should be obtained by a household to

fulfill its basic needs (Kairi Consultants, 1996). The poverty gap represents

the amount needed to raise the income of all poor individuals to the level of the

poverty line as a portion of the poverty line (Kairi Consultants, 1996).

The country of Belize is distributed into six (6) districts, Corozal, Orange Walk,

Belize, Cayo, Stann Creek and Toledo. These districts are merged into four

(4) regions, North, Corozal and Orange Walk districts, Central, Belize district,

West, Cayo district, and South, Stann Creek and Toledo. (Figure 8) Using

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the poverty gap as a measure of poverty in relation to districts Toledo (south)

has the highest gap, twenty one point eight (21.8), followed by Cayo (west),

twelve point two (12.2), ), Belize, six point seven (6.7), Orange Walk (North),

five point six (5.6), Corozal, five point five (5.5), and Stann Creek, four point

nine (4.9).

Mandani, 1999, argues that EPZ is not a policy instrument that ideally

promotes regional development of the least developed areas. He insists that

EPZ increase efficiencies in urban and developed areas with infrastructure,

utilities, workforce, ports and airports that are above average in a country. A

review of the total number of EPZ companies in operation by district and using

a high poverty gap to represent a need for development confirms Mandani’s

views. Toledo and Cayo have high poverty gaps, therefore being the poorest

districts, and have a low number of operating EPZ, three (3) and four (4), in

their area. (Table 13, Figure 14, and Table 18) Belize and Stann Creek

have low poverty gaps, therefore being the richest districts, and have a high

number of operating EPZ, twenty five (25) and seventeen (17), in their area.

(Table 13, Figure 14, and Table 18) The Belize district contains Belize City,

the country’s economic hub with the only international airport, a sea port, best

workforce, and best utilities in the country. Stann Creek contains many

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natural resources and infrastructure, fertile land, water supply, paved roads,

and a sea port. While Mandani’s EPZ location view does not hold for Orange

Walk and Corozal, relatively rich districts that are characterized by low levels

of EPZ in operation, as districts, it holds when they are merged to represent

the northern region. (Table 13, Figure 14, and Table 18) The northern region

has a high poverty gap, therefore being a poor region, and has a low number

of operating EPZ, four, (4), in its area. (Table 13, Figure 14, and Table

18)The number of operating companies in the northern region is skewed to

non operational as a result of no companies operating in the Orange Walk

district. (Table 13 and Figure 14)

As discussed in EPZ Location Evolution section, EPZ programs maximizes

efficiency by being located in the economic centers where the best factors of

production are located.

The female population is characterized with a high level of poverty than the

male population. (Table 18) The EPZ industries are generally geared toward

female employment; this female employment of EPZ may be contributing to

provide a stable labor force for female employees.

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Table 18

Main Poverty Indicators of Belize by District

Item Corozal Orange Belize Cayo Stann Toledo

All

Belize

Walk Creek

MAJOR INDICATORS

Poor Households 20.3 21.0 18.6 33.5 16.1 47.6 25.3

Poor Population 26.7 24.9 24.5 41.0 26.5 57.6 33.0

Indigent

Households 5.9 2.9 4.9 15.9 2.2 40.2 9.6

Indigent

Population 8.7 5.0 6.5 19.7 5.1 47.2 13.4

Youth Population 25.6 27.5 21.1 41.1 19.7 50.0 31.6

Elderly Population 19.4 44.0 19.7 30.6 14.3 45.5 27.6

Female

Population 27.3 25.6 25.4 39.8 28.9 56.3 33.1

Male Population 26.0 24.2 23.5 42.1 24.4 58.9 32.8

Male heads 17.6 17.0 12.4 36.3 13.2 50.7 23.6

Female Heads 36.4 38.5 29.5 25.0 29.4 30.8 30.5

Poverty Gap 5.5 5.6 6.7 12.2 4.9 21.8 8.7

Source: Kairi Consultants (1996)

5.3.2.4.1 Trade

5.3.2.4.2 Major Domestic Exports

Companies in the EPZ program contribute greatly to Belize’s Major Domestic

Exports. A review of the composition of the Major Domestic Exports of Belize

reveal that the EPZ program accounts for five (5) of the nine (9) headings.

These are Marine Products, Orange Concentrate, Grapefruit concentrate,

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Garments, and Papaya. EPZ contribution to Major Domestic Exports has

increased from one hundred and four point forty one (104.41) US$ million, fifty

five point six (55.6) percent in 2000 to one hundred and nine point twenty

seven (109.27)US$ million, fifty five point two (59.2) percent in 2002. The

increase in EPZ contribution reflects a decline in Orange Concentrate,

Grapefruit Concentrate, and Garments and an increase in Marine Products

(farmed shrimp) and Papaya.

In terms of Marine Exports, which accounted for the largest amount of Major

Domestic Exports in 2002 and 2003, by replacing Sugar and Citrus products

since 2002, EPZ have contributed greatly to diversifying exports away from the

agricultural products of colonialism. The other emerging EPZ export in the

Major Domestic Exports is Papaya, which is the only other sector, apart from

Marine Products, that have registered a growth from 2000 to 2003.

Table 19

Major Domestic Exports, US$ million: 2000 – 2003

2000 2001 2002 2003

*Marine Products

value 49.13 33.21 35.18 91.85

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Sugar

value 37.20 29.69 32.99 36.88

Molasses

value 0.14 0.83 1.34 1.24

Orange Concentrate

value 47.63 34.43 26.75 33.12

Grapefruit Concentrate

value 6.71 7.85 6.98 6.22

Bananas

value 32.41 21.40 16.75 26.29

Garments

value 19.79 15.51 15.22 15.70

Sawn Wood

value 2.32 1.35 1.30 1.78

Papaya

value 5.73 5.13 7.76 8.31

Sub-total 187.63 149.38 144.25 184.63

Other

Exports 22.77 13.35 14.09 7.69

Grand

Total 210.40 162.73 158.34 192.32Exclude Aquarium Fish

Source: Central Statistical Office of Belize, 2004

5.3.2.4.3 Marine Exports

White farm shrimp, which is comprised solely of EPZ companies, represented

twenty four point five seven (24.57) US$ million or sixty nine point 8 (69.8)

percent of the total Marine Exports in 2000. By 2003 this number had risen to

forty five point nine three (45.93) US$ million and eighty three point three

(83.30) percent of total Marine Exports. The EPZ program’s Aquaculture

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sector has contributed greatly to the increase in Belize’s Marine Exports, which

has been leading Belize’s GDP growth.

Table 20

Marine Exports, US$ million: 2000 – 2003

2000 2001 2002 2003

Whole fish

value 0.81 1.06 0.06 0.02

Lobster tail

value 7.59 6.10 6.46 6.76

Lobster meat

value 0.12 0.17 0.17 0.05

White farmed

shrimp

value 24.57 23.28 25.71 45.93

Pink sea shrimp

value 0.25 0.12 1.08 0.49Conch

value 1.79 2.49 1.72 1.87

Crab

value 0.10 0.00 0.00 0.02

Aquarium fish

value 0.05 0.02 0.03 0.05

Total 35.28 33.24 35.23 55.19

Source: Central Statistical Office of Belize, 2004

5.3.2.4.4 Imports by Origin

Belize’s origin of imports has historically been predominantly from the United

Kingdom and the US. Belize’s imports by origin reflect an increase in imports

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from its regional trade partners, Mexico, CARICOM and Central America.

This diversity in trading partners of imports is greatly enhanced by EPZ which

imported approximately ten (10) percent of the economy’s total import from

2000 to 2003.

Table 21

Imports by Origin, US$ million: 2000 – 2003

2000 2001 2002 2003

United States of

America 253.55 237.23 221.36 232.91

Mexico 44.06 43.36 41.07 43.61

United Kingdom 14.05 16.32 16.45 17.64

Other European Union 26.15 20.19 26.20 29.13

Central America 47.01 60.70 87.13 92.41

CARICOM 14.70 21.88 16.08 15.62

Canada 8.06 6.74 8.58 6.93

Other 116.72 110.42 107.63 113.81

Total 524.30 516.84 524.50 552.06

Source: Central Statistical Office of Belize, 2004-07-26

5.3.3.1.1 Employment

5.3.3.1.2 EPZ Annual Employment

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The EPZ program has employed an average of approximately two thousand

one hundred and eighty seven (2,187) people from 1998 to 2003. (Table 22

and Figure 16) From 2000 to 2003 the program’s annual employment is

higher at two thousand four hundred and four (2,404), of which an average of

two thousand two hundred and seventy four (2,274) local employees were

hired and an average of one hundred and thirty (130) foreign workers were

employed. (Table 22 and Figure 16) The total annual employment fluctuates,

though there is a general trend of higher employment exceeding two thousand

(2,000) employees for the period 2000 to 2003. The number of foreign

employees declined from 2000 with a number of one hundred and sixty one

(161) to 2002 with a number of eighty nine (89). (Table 22 and Figure 16)

The number of foreign employees increased in 2003 to one hundred and thirty

four (134), which is below the numbers of 2001 and 2000. (Table 22 and

Figure 16) The increase in employment has been accompanied by decrease

in foreign employment. (Table 22 and Figure 16)

Table 22

EPZ Annual Employment of Belizeans and Foreigners (1998 – 2003)

Year Employment

Belizeans Foreigners TOTAL

1998 NA NA 1,541

1999 NA NA 1,967

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2000 2,325 161 2,486

2001 2,033 136 2,169

2002 2,595 89 2,684

2003 2,140 134 2,274

TOTAL 13,121

Figure 16

EPZ Annual Employment of Belizeans and Foreigners (1998 – 2003)

EPZ Annual Employment Belizeans andForeigners

0

500

1000

1500

2000

2500

3000

1998 1999 2000 2001 2002 2003

Year

Employment Number

Belizeans

Foreigners

TOTAL


5.3.3.1.3 EPZ Annual Employment and Belize’s Annual

Employed Labor Force (1998-2003)

From 1998 to 2002 the program has employed and average of two point eight

(2.8) percent of the Belizean employed labor force. (Table 23 and Figure 17)

Both the Belizean employed labor force and the EPZ labor force have had an

increase in employment. (Table 15 and Figure 14)

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Table 23

EPZ Annual Employment and Belize’s Annual Employed Labor Force

(1998-2003)

Year

Belize

Total

Employed

Labor

Force

EPZ Total

Employment

EPZ % of

Total

1998 70,680 1,541 2.2

1999 73,345 1,967 2.7

2000 77,755 2,486 3.2

2001 85,869 2,169 2.5

2002 84,720 2,684 3.2

2003 NA 2,274 NA

Figure 17

EPZ Annual Employment and Belize’s Annual Employed Labor Force

(1998-2003)

EPZ and Belize Annual Employment

0

20,000

40,000

60,000

80,000

100,000

1998 1999 2000 2001 2002 2003

Year

Employment Number

EPZ Employment

Belize Employed LabourForce

Source: Central Statistical Office of Belize (2004)

Ministry of Finance (2004)

5.3.3.1.4 Belize’s Annual Employed Labor Force and Sex

(1998-2002)

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Both the female and male employed labor force has been increasing from

1998 to 2002. (Table 24 and Figure 18) However, the Belizean employed

labor force reflects a male domination which annual accounts for

approximately twice that of the female workforce. (Table 16 and Figure 15)

Table 24

Belize’s Annual Employed Labor Force and Sex (1998-2002)

Belize Employed

Labor Force by

Sex

Year Male Female

1998 49,265 21,415

1999 50,090 23,255

2000 53,680 24,075

2001 58,546 27,323

2002 58,582 26,1382003 NA NA

Figure 18

Belize’s Annual Employed Labor Force and Sex (1998-2002)

Belize Employed Labour Force by Sex

0

10000

20000

30000

40000

50000

60000

70000

Year 1998 1999 2000 2001 2002 2003

Year

Employment Numbe

Male

Female

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5.3.3.1.5 Location and Belize’s Employed Labor Force

(1998-2002)

Belize’s employed labor force from 1998 to 2002 was concentrated in the

Belize district followed by Cayo, Orange Walk, Corozal, Stann Creek and

Toledo. (Table 25 and Figure 19)

Table 25Location and Belize’s Employed Labor Force (1998-2002)

Belize Employed Labor Force by District

Year Corozal Orange Walk Belize Cayo Stann Creek Toledo TOTAL

1998 10,005 10,595 23,405 13,320 7,580 5,775 70,680

1999 10,125 12,030 23,490 13,460 7,730 6,510 73,345

2000 10,700 12,415 24,505 13,485 9,860 6,790 77,755

2001 11,013 12,509 30,042 15,941 8,684 7,680 85,869

2002 10,166 13,955 29,466 17,171 7,994 5,968 84,720

2003 NA NA NA NA NA NA NA

Figure 19

Location and Belize’s Employed Labor Force (1998-2002)

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Belize employed Labour Force by District

0

5000

10000

15000

20000

2500030000

35000

1998 1999 2000 2001 2002

Year

Employment Number Year

Corozal

Orange Walk

Belize

Cayo

Stann Creek

Toledo


Table 26

Employment of EPZ in 6 Countries

Year Country Employment

% of total

workforce

1993 Ireland 4,268 0.3

1985 Taiwan 76,924 11982 Malaysia 70,885 1.6

1982 Philippines 25,610 0.1

1981 SriLanka 17,813 0.3

2003 Belize 2,684 3.2

Source: Shoesmith p. 68, 1986

The global comparison of employment of EPZ reflects that Belize’s program

employment, as a percentage of the total workforce, is relatively higher than

the other countries. (Table 26)

5.3.3.1.6 Analysis of Employment

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While the total annual employment figures of the program represent a small

part of the economy’s employed labor force, the program does provide a

constant level of annual employment on which other areas of the economy can

build on. The program is characterized by a high number of operational

companies in industries that employ a large number of females, Aquaculture,

Agro-Processing, and Data-Processing. These companies may be playing a

greater role in the economy’s employment by employing female workers .Also

the annual two point eight (2.8) percent of the economy’s employment that the

program has accounted for from 1998 to 2002 is an understatement if the

employment figure is reviewed in reference to the areas where EPZ are

located. No EPZ are in Orange Walk, therefore if the program’s employment

is looked at as a percentage of the five of six districts in which it operates the

significance will increase. The low level of employment experienced by the

southern district of Toledo and its inexistence in Orange Walk reflects again

that the program should not seek to attain regional development objectives,

but should rather seek to effectively and efficiently utilize developed centers of

the country to attain their industrial potential. In relation to the global

employment comparison, the EPZ program in Belize is relatively new.

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Therefore the employment would be relatively higher. The EPZ program

does not play significant roles in economic development as time progress.

5.3.3.2.1 Investment

5.3.3.2.2 EPZ Investment (1998-2003)

The programs annual investment experienced a surge from 1998 to 1999,

which was followed by a large drop in 2000. (Table 27 and Figure 20) From

2000 to 2002 the total investment has been steadily increasing, which was

brought to a pause in 2002 with the program experiencing an investment level

as low as 1998. (Table 27 and Figure 20)

Table 27

EPZ Investment (1998-2003)

Total

Investment

Year

Investment

(US$)

1998 30,034,639

1999 615,129,614

2000 95,725,576

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2001 153,527,590

2002 225,716,508

2003 30,699,159

TOTAL 1,150,833,086

Figure 20

EPZ Investment (1998-2003)

EPZ Annual Investment

0

100,000,000

200,000,000

300,000,000

400,000,000

500,000,000

600,000,000

700,000,000

1998 1999 2000 2001 2002 2003Year

Total Investmen

Investment (US$)


The comparison of EPZ investments and the National Account investments

reveals that the EPZ program’s investment is significant in the Belizean

economy. (Table 28 and Figure 21)

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Table 28

EPZ and National Accounts Investment as a Percentage of GDP, Local

Currency constant Prices

Year EPZ

Gross

Domestic

Private Public

Gross

Domestic

1998 4 NA NA NA

1999 83 17 15 32

2000 12 18 16 34

2001 18 19 16 35

2002 24 21 12 32

2003 3 NA NA NA

Figure 21

EPZ and National Accounts Investment as a Percentage of GDP, Local

Currency constant Prices

0

10

20

30

40

50

60

70

80

90

1998 1999 2000 2001 2002 2003

Year

% of GD

EPZ

Gross Domestic Private

Public

Gross Domestic

Source: Central Bank of Belize (2004)

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5.3.3.2.3 Analysis of EPZ Investment

The program’s annual investment numbers fluctuate significantly. As a

percent of GDP, the data reflects that EPZ investment is significant. The

fluctuation reflects the potential of the program’s investment as well as its

instability.

5.3.3.3.1 Foreign Exchange Earnings

5.3.3.3.2 EPZ Foreign Exchange Earnings (1998-2003)

EPZ are intended to boost trade. Rising exports by themselves do not,

however, represent economic progress if import bills rise at a corresponding

rate (Shoesmith, 1986). The program’s annual foreign exchange earnings

reflect fluctuations. (Table 29 and Figure 22) The highest annual foreign

exchange earnings were experienced in the early years of the program, 1998.

(Table 29 and Figure 22) The trade balance was a deficit in two (2) of the last

four years. However over the entire period the cumulative trade balances was

a surplus.

Table 29

EPZ Balance of Trade (2000-2003)

Year

EPZ

Imports

EPZ

Exports

EPZ

Trade

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Balance

2000 50.28 88.8 38.52

2001 43.51 25.02 -18.49

2002 40.01 73.37 33.36

2003 65.27 58.16 -7.11

2000 -

2003 199.07 245.35 46.28


Figure 22

EPZ Balance of Trade (2000-2003)

EPZ Trade Balance 2000-2003

-50

0

50

100

150

200

250

300

2000 2001 2002 2003 2000 -

2003

Year

US$ millio EPZ Imports

EPZ Exports

EPZ Trade Balance


The EPZ program imports as a percentage of the economy’s entire imports is

relatively lower than its export as a percentage of the economy’s export. (Table

30 and Figure 23)

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Table 30

EPZ Imports and Belize Gross Imports (2000 – 2003)

Year

EPZ

Imports

Belize

Imports % EPZ

2000 50.28 524.29 10

2001 43.51 516.83 9

2002 40.01 524.52 8

2003 65.27 551.67 12

2000 -

2003 199.07 2117.31 10

Figure 23

EPZ Imports and Belize Gross Imports (2000 – 2003)

0

500

1000

1500

2000

2500

2000 2001 2002 2003 2000 -

2003

Year

US $millio

EPZ Imports

Belize Imports



Table 31

EPZ Exports and Belize Domestic Exports (2000 – 2003)

Year EPZ Belize % EPZ

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Exports Exports

2000 88.8 210.39 42

2001 25.02 162.73 15

2002 73.37 158.34 46

2003 58.16 192.32 30

2000 -

2003 245.35 723.78 34

Figure 24

EPZ Exports and Belize Domestic Exports (2000 – 2003)

0

100

200

300

400

500

600

700

800

2000 2001 2002 2003 2000 -

2003

Year

US $millio

EPZ Exports

Belize Exports



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5.3.3.3.3 Analysis of EPZ Impact on Belize’s Economy

EPZ’s employment has been constant and in comparison with countries that

have had EPZ programs for many years, the annual employment figures as a

percentage of GDP is relatively high. The Belizean workforce is

characterized by a male dominance; therefore the many EPZ companies that

employ women may be playing a greater role in the economy by employing

women.

In relation to the national indicators of Gross Private Investment and Gross

Investment EPZ investment is significant.

The data describes that the economy’s exports is highly depended on the EPZ

program’s exports.

5.3.3.4.1 Technology Transfer

5.3.3.4.2 Human Resource Development (Education and

Training)

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Some enterprise training takes place in EPZ. Training for factory operators is

mainly on the job. The training is mostly task-specific and geared to

enhancing productivity and efficiency in the firms operation. In some cases,

workers in EPZ receive more substantial training but this is typically restricted

to the higher end of skills (Kusago and Tzannatos, 1998)

Table 32Training for Employees in EPZ

Industry Training Provided

Aquaculture Health and safety issues; Computer certification;

Technical training on farm; Pond management; Overseas

training on mariculture techniques.

Agro-Processing Occupational safety and health; Dehydration technology;

Laboratory analysis; Product quality testing; Pulp recovery

and oil extraction; Electrical hazards and machinesguarding; Evaporator installation and dismantling; Lab

testing procedures; Undergraduate degree in Business;

Graduate degree in Business Administration; Good

manufacturing practices.

Manufacturing On the job machinery usage; Lathe operator; Operation of

equipment; Engineering.

Other Cashier; Security; Slot attendants, Dealers

Data Processing On the job data processing


5.3.3.4.3 Analysis of Human Resource Development

Workers in the zone are exposed to new technology, entrepreneurial and

organizational skills that are transferred to the economy, hence the worker

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may be indirectly contributing to the adoption sector (Sinclair, 2001). The

EPZ acts like an institution of learning. Working in a diverse workforce

comprised of foreign and local managers is helpful. The employees share

cultures, and utilize the positives from each other and blend their knowledge to

make an effective, productive, enjoyable environment.

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Question 3

5.3.3.5.1 What factors within the EPZ program influences its

contribution to the Belizean Economy?

5.3.3.5.2 EPZ 2003 Performance

In addressing this question figures in relation to the Dependent variables of

employment, sales, value of raw material used and investment for 2003 will be

analyzed by reviewing the regression analysis of a sample of the operational

EPZ companies to identify the relative importance of the Independent

variables of industries, ownership, EPZ type, EPZ location and year of EPZ

designation. The regression identifies how the Independent variables

fluctuate around the dependent variables. By identifying the factors that

contribute significantly to the EPZ program, the factors in the EPZ program

that significantly contribute to the Belize economy are also identified.

The significance of the Independent variables was identified in the variables

that have a t-ratio greater than 1.96. This indicated that the variable is

statistically significant at a five (5) % level.

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Table 33

Employment Regression Results

Independent

Variables Dependent Variables

Local Employment

Foreign

Employment

Constant/Intercept Coefficient t ratio Coefficient t ratio

Industry

Agro-Processing/

Constant 74.25 1.64 1.75 0.59Aquaculture -47.25 -0.81 1.92 0.50

Manufacturing 72.50 1.13 3.00 0.72

Ownership Belizean/ 55.67 1.28 4.17 1.79

North American 43.53 0.67 -2.77 -0.80

Joint Venture -46.67 -0.41 -4.17 -0.68

Asian 47.83 0.55 3.83 0.82

Type

Special EPZ/

Constant 72.00 2.56 3.46 2.15

EPZ Business 38.00 0.36 -0.46 -0.08

Location

Belize/

Constant 152.67 2.55 0.67 0.19

Corozal -42.67 -0.36 2.33 0.34

Cayo -95.17 -1.00 7.33 1.34

Stann Creek -103.67 -1.45 3.19 0.77

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Toledo -132.67 -1.11 -0.67 -0.10

Year of

Designation 2000/Constant 76.40 3.54 6.80 2.32

1998 -38.07 -1.08 -3.80 -0.79

1999 69.60 1.32 -6.80 -0.95

1995 285.60 5.40 -6.80 -0.95

2001 -61.90 -1.53 -5.30 -0.97

2002 -67.40 -1.27 -4.80 -0.67

2003 -73.40 -1.39 -6.80 -0.95

5.3.3.5.3.1 Employment

5.3.3.5.3.2 Local Employment

Special EPZ, Belize district and companies designated in 1995 and 2000 were

statistically significant in relation to local employment. (Table 33)

5.3.3.5.3.3 Foreign Employment

Special EPZ and companies designated in 2000 were statistically significant in

relation to foreign employment. (Table 33)

Table 34

Sales Regression Results

Independent

Variable Dependent Variables

Local Sales Foreign Sales

Constant/Intercept Coefficient t ratio Coefficient t ratio

Industry Agro-Processing/Constant 1339339.75 3.28 6556581.25 2.48

Aquaculture -1338687.25 -2.54 -5256894.08 -1.54

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Manufacturing -1226406.75 -2.12 -2537530.50 -0.68


North American -892787.17 -1.50 -1189383.43 -0.34

Joint Venture -889508.17 -0.84 -4751383.83 -0.75

Asian -667027.17 -0.83 -3808304.83 -0.80

Type Special EPZ/Constant 447154.31 1.62 3687969.92 2.38

EPZ Business -447154.31 -0.43 -1530927.92 -0.26

Location Belize/Constant 1128.33 0.00 5500357.67 1.57

Corozal -1128.33 0.00 -3343315.67 -0.48

Cayo 224737.67 0.23 -5437895.67 -0.98

Stann Creek 764284.38 1.03 -1270734.67 -0.30

Toledo -1128.33 0.00 -3790106.67 -0.54

Year of


1998 -618332.00 -0.98 -2190615.80 -0.73

1999 2102234.00 2.22 9580824.20 2.12

1995 -618332.00 -0.65 10171406.20 2.252001 -618332.00 -0.85 -3438053.80 -1.00

2002 -617802.00 -0.65 -3336424.80 -0.74

2003 -618082.00 -0.65 -3586830.80 -0.79

5.3.3.5.4.1 Sales

5.3.3.5.4.2 Local Sales

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The Agro-processing industry, Belizean Investors and companies designated

in 1999 were statistically significant in relation to local sales. (Table 34)

5.3.3.5.4.3 Foreign Exchange Earnings

The Agro-processing industry, Belizean investors, Special EPZ and

companies designated in 1995, 1999 and 2000 were statistically significant in

relation to Foreign exchange earnings. (Table 34)

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Table 35

Investment Regression Results

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2003 Investment

Independent

Variable Constant/Intercept Dependent Variables

2003 Investment Total Investment

Coefficient t ratio Coefficient t ratio


Aquaculture 142540.33 0.07 714122.67 0.24

Manufacturing 5239250.00 2.39 13446120.00 4.09


North American 1953716.83 0.93 3327320.33 1.35

Joint Venture -295344.17 -0.08 -241345.67 -0.06

Asian 6156269.83 2.17 18863773.33 5.69


EPZ Business -969077.08 -0.24 15613078.77 2.34


Corozal 865086.33 0.99 18449588.00 11.27

Cayo 10387586.33 15.06 16960828.00 13.11

Stann Creek 190555.05 0.37 29053.71 0.03

Toledo 1735066.33 1.99 2749588.00 1.68

Year of


1998 -2064597.40 -0.61 -7100556.40 -1.12

1999 -1645788.40 -0.33 -7475087.40 -0.79

1995 -2437562.40 -0.48 -7266861.40 -0.77

2001 1978088.10 0.51 -809981.40 -0.11

2002 -2501022.40 -0.50 -8207321.40 -0.872003 -2616922.40 -0.52 -9346221.40 -0.99

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5.3.3.5.5.1 Investment

5.3.3.5.5.2 2003 Investment

The Manufacturing industry, Asian investors, Cayo and Toledo districts were

statistically significant in relation to 2003 Investment. (Table 35)

5.3.3.5.5.3 Total investment

Manufacturing, Asian investors, Special EPZ, EPZ Businesses, Corozal, Cayo

and companies designated in 2000 are statistically significant in relation to

total investment. (Table 35)

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Table 36

Raw Material Usage Regression Results

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Independent

Variable Constant/Intercept Dependent Variables

Local Raw Material

Usage

Imported Raw

Material Usage

Coefficient

t

ratio Coefficient t ratio


Aquaculture -1724384.08 -1.11 -2042270.25 -1.31

Manufacturing -2339647.00 -1.37 -660645.25 -0.39


North American -1823726.37 -1.19 -291017.03 -0.18

Joint Venture -2050764.17 -0.75 -1392068.83 -0.48

Asian -1933055.17 -0.94 -972365.83 -0.44


EPZ Business -1127097.38 -0.43 -339978.46 -0.13


Corozal -57696.67 -0.02 -1017820.67 -0.31

Cayo 171174.83 0.07 -1728873.17 -0.68

Stann Creek 1781785.05 0.95 -552687.52 -0.29

Toledo 1087364.33 0.35 -1485389.67 -0.46

Year of


1998 -2005408.53 -0.93 -120879.13 -0.58

1999 -1743049.20 -0.54 7748777.20 24.84

1995 -2433195.20 -0.75 4771532.20 15.29

2001 -2263323.70 -0.92 -307093.30 -1.29

2002 -2280154.20 -0.71 -218725.80 -0.70

2003 -2413195.20 -0.75 -280614 -0.90

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5.3.3.5.6.1 Raw Material Usage

5.3.3.5.6.2 Local Raw Material Usage

In terms of local raw material the Agro-Processing industry and Belizean

investors are significant. (Table 36)

5.3.3.5.6.3 Imported Raw Material Usage

Companies designated in 1999, 1995 and 2000 were statistically significant in

relation to imported raw material usage. (Table 36)

5.3.3.5.7.1 Independent Variables

5.3.3.5.7.2 Industry

In terms of industry, the Agro-Processing was statistically significant at a 5%

level with Agro-processing being the constant in the utilization of local raw

material, local sales and foreign exchange earnings in 2003. Manufacturing

was statistically significant at a 5% level with Agro-processing being the

constant in the programs total investment and 2003 investment. No industry

was statistically significant in reference to employment and imported raw

material usage in 2003.

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5.3.3.5.7.3 Ownership

The Belizean companies were statistically significant at a 5% level with

Belizean companies being the constant in the amount of local sales, foreign

exchange earnings, and the usage of local raw materials in 2003. Asian

investors were statistically significant a 5% level with Belizean companies

being the constant in total investment and 2003 investment. No ownership

was statistically significant in reference to imported raw material usage and

employment in 2003.

5.3.3.5.7.4 EPZ Type

The EPZ Businesses were significant at a 5% level with Special EPZ being the

constant in total investment. Special EPZ were significant at a 5% level with

Special EPZ being the constant in local and foreign employment, and foreign

exchange earnings in 2003. No types of EPZ were significant in reference to

local sales, local and imported raw material usage, and 2003 investment.

5.3.3.5.7.5 EPZ Location

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Belize district was significant at a 5% level with Belize being the constant in

local employment for 2003. Cayo district was significant at a 5% level with

Belize being the constant in 2003 investment and total investment. Toledo

district was significant at a 5% level with Belize being the constant in 2003

investment. Cayo district was significant at a 5% level with Belize being the

constant in total investment. No location was significant in reference to raw

material usage, foreign employment and sales in 2003.

5.3.3.5.7.5 Year of EPZ Designation

The companies designated in 1995 were significant at a 5% level with 2000 as

the constant in local employment, foreign exchange earnings, and imported

raw material usage in 2003. The companies designated in 1999 were

significant at a 5% level with 2000 as the constant in local sales, foreign

exchange earnings, and imported raw material usage in 2003. The

companies designated in 2000 were significant at a 5% level with 2000 as the

constant in local and foreign employment, foreign exchange earnings, and

imported raw material usage and total investment in 2003. There was no

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annual designation significance in local raw material usage and 2003

investment.

5.3.3.5.8.1 Analysis of Regression Analysis

Table 37

Summary of Regression Analysis for EPZ 2003 Performance Data

(Employment and Sales)

Independent


Local

Employment

Foreign

Employment Local Sales

Foreign

Exchange

Earnings

Industry Non Non Agro-Processing Agro-Processing

Ownership Non Non Belizean Belizean

Type Special EPZ Special EPZ Special EPZ

Location Belize Non Non NonYear of

Designation 1995, 2000 2000 1999 1995, 1999, 2000

Table 38

Summary of Regression Analysis for EPZ 2003 Performance Data (Raw

Material Usage and Investment)

Independent


Local Raw Material

Usage

Imported Raw

Material Usage 2003 Investment

Total

Investment

Industry Agro-Processing Non Manufacturing Manufacturing

Ownership Belizean Non Asian Asian

Type Non Non Non Special EPZ,

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EPZ Business

Location Non Non Cayo, Toledo Corozal, Cayo

Year of

Designation Non 1999, 1995, 2000 Non 2000

5.3.3.5.8.2 Industry

In terms of industry, the Agro-Processing was statistically significant at a 5%

level with Agro-processing being the constant in the utilization of local raw

material, local sales and foreign exchange earnings in 2003. Manufacturing

was statistically significant at a 5% level with Agro-processing being the

constant in the programs total investment and 2003 investment. No industry

was statistically significant in reference to employment and imported raw

material usage in 2003.

Agro-Processing was important in terms of sale, both local and foreign and

local usage of raw materials. Manufacturing was important in terms of

investment, both 2003 investment and total investment.

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5.3.3.5.8.3 Ownership

The Belizean companies were statistically significant at a 5% level with

Belizean companies being the constant in the amount of local sales, foreign

exchange earnings, and the usage of local raw materials in 2003. Asian

investors were statistically significant a 5% level with Belizean companies

being the constant in total investment and 2003 investment. No ownership

was statistically significant in reference to imported raw material usage and

employment in 2003.

Belizean Investors were important in terms of sale, both local and foreign and

local usage of raw materials. Asian investors were important in terms of

investment, both 2003 investment and total investment

5.3.3.5.8.4 EPZ Type

The EPZ Businesses were significant at a 5% level with Special EPZ being the

constant in total investment. Special EPZ were significant at a 5% level with

Special EPZ being the constant in local and foreign employment, and foreign

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exchange earnings in 2003. No types of EPZ were significant in reference to

local sales, local and imported raw material usage, and 2003 investment.

Special EPZ were important in terms of employment, both local and foreign,

foreign exchange earnings, and total investment. EPZ Businesses were also

important in terms of total investment.

5.3.3.5.8.5 EPZ Location

Belize district was significant at a 5% level with Belize being the constant in

local employment for 2003. Cayo district was significant at a 5% level with

Belize being the constant in 2003 investment and total investment. Toledo

district was significant at a 5% level with Belize being the constant in 2003

investment. Cayo district was significant at a 5% level with Belize being the

constant in total investment. No location was significant in reference to raw

material usage, foreign employment and sales in 2003.

Belize district was important in terms of local employment. Cayo district was

important in terms of 2003 investment and total investment. Toledo district

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was important in terms of 2003 investment. Corozal district was important in

terms of total investment.

5.3.3.5.8.6 Year of EPZ Designation

The companies designated in 1995 were significant at a 5% level with 2000 as

the constant in local employment, foreign exchange earnings, and imported

raw material usage in 2003. The companies designated in 1999 were

significant at a 5% level with 2000 as the constant in local sales, foreign

exchange earnings, and imported raw material usage in 2003. The

companies designated in 2000 were significant at a 5% level with 2000 as the

constant in local and foreign employment, foreign exchange earnings, and

imported raw material usage and total investment in 2003. There was no

annual designation significance in local raw material usage and 2003

investment.

Companies designated in 1995 were important in terms of local employment,

foreign exchange earnings and imported raw material usage. Companies

designated in 1999 were important in terms of local sales, foreign sales, and

imported raw material usage. Companies designated in 2000 were more

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important in local employment, foreign employment, foreign exchange

earnings, imported raw material usage and total investment.

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