export procesing the dominican republic
TRANSCRIPT
EXPORT PROCESING ZONES IN THE DOMINICAN REPUBLIC
Dale Mathews University of Puerto Rico
Paper presented at the 21st Annual Conference of the Caribbean Studies Association
San Juan Marriott Hotel San Juan, herto Rico
May 27-31, 19%
VALUE ADDED AND LABOUR DEMAND CHARACTERISTICS IN EXPORT PROCESSING ZONES IN THE DOMINICAN REPUBLIC
1. Introduction
The purpose of this research is two-fold: (A.) to determine
the extent of certain linkages between the Export Processing (or
Zona Franca) sector of the Dominican Republic and the domestic sector; and (B.) to examine qualitative aspects of the demand for
labour by enterprises housed in these Export Processing Zones
(EPZs). Linked to (A.) is a discussion of obstacles to the
deepening of value added in general. '?his research is based
largely on information derived from interviews with plant managers
and other personnel belonging to 46 EPZ enterprises in the
Dominican Republic.' It is supplemented with trade data that
sheds light on the relation between the EPZ sector of the Dominican
Republic and its chief market destination: the United States.
2. Linkages
Ironically, the defining characteristic of most EPZs, namely
their existence as enclaves with few links to the local economy
other than through the purchase of labour power, is increasingly
being recognised as a liability rather than an asset. Backward
linkages make economic sense by integrating other sectors of the
domestic economy into the export sector, increasing value added and
thus foreign exchange earnings. Their desireability is further
enhanced by their association with greater transfers of technology
at the firm level.2 Despite the advantages of formenting greater
linkages with the domestic (non-EPZ) economy, efforts in that
The survey was modelled on a managerial questionnaire derived from: Jorge Carrillo V. (Coordinator) , 'Mercados de trabajo en las actividades maquiladoras1, COLEF, prepared for Direccion General de Empleo de la Secretaria del Trabajo y Prevision Social, Gov't of Mexico, October, 1990.
Graduate School U.S.D.A., International Programs, 'Guidebook on free zones', prepared for the Bureau of Private Enterprise, USAID, 1984.: 1-3 to 1-4.
direction have met with little or no success in many cases,
including that of the Dominican Republic. In this section, the
issues related to linkages will be examined from a wider
perspective, encompassing both local purchases of inputs and
services, including consultancy services. Prior to this, a general
discussion of value added is necessary to place these issues in
their proper context.
2.1 Value Added - The Macro Perspective A s discussed in much of the literature on E P Z s , value added by
*&' ;*,*', l.,.'? - 5 " this sector throughout the world has historically been very low.
According to the World Bank, 'value added in EPZs is commonly
around 25 percent or slightly less, particularly when zones import
almost all their material inputs.13 A 1985 UNCTAD study, however,
presents a series of caveats which may push that figure
'considerably The UNCTAD study also notes that the
overall situation is encouraged by the commercial policies of
developed co~ntries.~ (In the case of the Dominican Republic,
this means Section 9802 .00 .80 - formerly known as Section 807) of the Tariff Schedule of the United States (as will be discussed
further on) . Although the reliability of available value added
estimates for DREPZs may be open to question, two sources are cited
below in order to provide a general idea of the range of local value added.
It is useful to approach the issue of the value-added-Section
9802 .00 .80 nex;Js from a more macro trade perspective. The focus
World Sank Industry Development Division, Industry and Energy Department [and] Trade Policy Division, Country Economics Department, 'Export processing zones', Policy and Research Series: 20, March, 1992: 15.
UNCTAD. Export Processing Free Zones in Develo~inq Countries: Implications for Trade and Industrialisation Policies, New York: Unitsd Nations, doc. TD/B/C.2/211/Rev. 1, 1985: 21.
Ihid.: 8.
will initially be restricted mostly to the garment sector which is the largest industry in the Dominican Republic's EPZS.~ In this
respect, TABLE 1 shows how significant section
TABLE 1 Dollar Value of US Imports of MFA Fibres from the Dominican Republic -- Total and 9802 MFA Imports
F*
9802 is for Dominican apparel and' textile edports to the United
States, accounting for 84% of togal Multi-Fibre Agreement (MFA)
exports into that country. It is Assumed that 9 8 0 2 . 0 0 . 8 0 exports
consitute a reliable proxy for EPZ:garment output in the Dominican
Republic for two reasons: 1 ) nearly all DREPZ exports are destined
to the USA; 2 ) over 90% of the DR's garment exports originate from
TOTAL MFA 9802 9802iTOTAL
the EPZS? (or occur under the EPZ regime) as opposed to the non-
EPZ domestic sector due to fiscal incentives and the relative
administrative ease of obtaining kustoms clearance for imported
inputs and exports (a key requiremdnt for successfully undertaking
9 8 0 2 . 0 0 . 8 0 operations). The predoninance of 9 8 0 2 . 0 0 . 8 0 operations
in the EPZ's garment sector is f f rther substantiated by results obtained from the survey for the current study which show that 25
( 8 9 % ) of the 28 garment sector EPZ operations included in the
8496, (source: U.S. Commerce Dept. Major Shippers Report).
U.S. $ millions 957.888 806.812
84%
sample make use of the section. .,
U.S. $ millions 1 255.782 1 049.509
In this instance, U.S. import data is used: only data for the garment industry was available as a percentage of total sector imports from the Dominican Republic (ie. 9 8 0 2 . 0 0 . 8 0 garments and textiles as a proportion of total MFA fibre imports).
Kurt Hoffman, 'Textile and clothing industries in the Dominican Republic: an agenda for restrucfuring', draft report prepared for the UNDP Industrial Restructuring Mission, June 1991: 1.
It is possible to determine the value of US content by
referring to the duty exempt value of imports under Section
9802.00.80 as reported by US customs authorities since this Section
stipulates the levying of taxes only on foreign value added. The
figures provided in TABLE 2 show US content approaching a very high
70% of the value of total 9802.00.80 imports from the Dominican
Republic, a figure which is reportadly
TABLE 2 Dollar Value of US Imports of Textiles, Apparel and Footwear from the Dominican Republic Under Section 9802.00.80 of the USTS --dutiable and duty-free
** value added outside U.S.
substantially greater than that corresponding to other sources of
7
9802.00.80 goods outside the cari$bean.' However, the remaining
taxable portion does not necessarily repre3ent value added t
?TOTAL
exclusively in the Dominican ~ e ~ u b l P c since it does not distinguish
Year - 1992 U.S. $ millions % of TOTAL
between value added there and inyother non-US countries, among %
other things (ie. such as through t&e Puerto Rico twin-plant link). EL
1) Duty Free Value* 2) Dutiable Value**
1096.467
Year - 1 991 U.S. $ millions % of TOTAL
Hence, the actual level for the ,&DR may be lower than the 32%
100% 807.689
I foreign value added presented in TABLE 2.
* U.S. content (Source: USITC)
100%
In order to shed more light on this situation, it is
68% 32%
546.591 261.097
necessary to make a brief digression to discuss aspects of the
68% 750.332 324 346.135
quota system under Section 9802.00.80 of the US Tarriff Schedule.
TABLE 3 shows total 9802.00.80 imports into the United States
divided into regular 9802.00.80 aqd the special program known as
Gregory K. Schoepfle and Jorge F Perez-Lopez, 'Export- oriented assembly operations in the caribbea'nff in Irma Tirado de Alonso, ed. Trade Issues in the Caribbean, Philadelphia: Gordon and Breach, 1992: 133.
9802.00.8010. The latter, formerly known as section 807a, is
actually an import quota provision which stipulates a higher US
content requirement (see below). The generous or supposedly
'unlimited' 9802.00.8010 quotas, also known as Guaranteed Access
Levels (GALS), apply strictly to garments assembled from materials
formed and cut in the US, while apparel assembled from fabric not
formed but cut in the US can be shipped from the DR to the US under
the regular 9802.00.80's less generous quotas known as Specific
Limits (SLs) and Designated Consultation Levels (DCLs) .9 The
latter are taxed on their ~ominican am well as.
TABLE 3 Dollar Value of US Imports of MFA Fibres from the Dominican Republic under Section 9802.00.80 of the USTS --Regular 9802 and GALS {formerly 807 and 807a, respectively)
Year - 1991 Year - 1 992 U.S. $ millions % of TOTAL U.S. $ millions % of TOTAL
TOTAL 9802 (1 +2) 806.81 2 100% 1 049.509 1 00% 1) Regular 9802 438.248 54% 513.497 49%
46 536.01 2 51 %
w < their 'foreign' (non-Dominican and'non-US) content upon entry into t the US, possibly contributing to &reduction ini Dominican content
f below the 32% foreign value added shown for 9802.00.80 goods in
TABLE 2. The high proportion of 9802.00.80 I goods entering under
the GALS quotas (TABLE 3) is most likely responsible for the high
US content (70%) noted earlier. *. I .
The importance of GALS is evident from the approximately 50%
share it occupies within total US MFA imports of 9802.00.80 goods
from the Dominican Republic. ~cc&rdin~ to one author, the advent of GALS in 1986 has:
Thomas Bailey and Theo Eicher, 'The effect of a North American free trade agreement on apparel eriiployment in the USf, Paper prepared for the Bureau of International Labor Affairs, U.S. Department of Labor, October 1991: 9.
... created a communality of interest between US textile manufacturers and garment cutters and the DR assembly sector. This coalition obtained virtually unlimited market access to the US market that has eliminated the relevance of the US auotas. but which also eliminates the possibility of significant backward linkages in the DR. lo
Despite the high proportion of 9802.00.80 goods in total MFA
fibre imports from the Dominican Republic, evidenced in TABLE 1,
some garments and textiles nevertheless do enter which are excluded
from this tarriff provision all together. Many East
TABLE 4 Value Added in Dominican EPZs {Net Foreign Exchange Earnings as a percentage of Total EPZ Exports)
I ]Net Exch. ITot. EPZ /Value Added I
Asian investors in the Caribbean are reportedly involved in Cut, P
Make and Trim (CMT) operations whish are not coSered by any of the heretofore mentioned US tariff provisions." These CMT processes
Y involve greater value added than 807/807a proc&sses and are more
* common in places like Jamaica which has succeeded in attracting a
large number of East Asian investors to it's EPZs and exports to
the EEC under Lome.
Francisco E. Thoumi, 'Economic policy, free zones and export assembly manufacturing in the Dominican Republic', in Irma Tirado de Alonso, ed. Trade Issues in the Caribbean, Philadelphia: Gordon and Breach, 1992: 172 (f.n.).
l 1 US International Trade Commission, Production Sharinq: U.S. Imports Under Harmonized Tariff Schedule ~ubhdadinqs 9802.00.60 and 9802.00.80, 1986-1989 Publication 2365, Washington D.C., March 1991: 6-3
Given the persisting uncertainties, discussed above, which
prevent a precise determination of value added in DREPZs, it is
useful to compare the information contained in TABLE 2 with value
added calculations derived by Dominican authorities. In this
respect, TABLE 4 provides value added figures for total DREPZ
exports (garment and non-garment) based on net foreign exchange
earnings as a percentage of the value of total EPZ exports. Net
foreign exchange earnings represent the total EPZ sector outlay for
local purchases of goods and services as required by law, and hence
provide the best possible estimates of local value added. .,,A , . I , * 4 L r-ll'., *BY.')! ' C
According to TABLE 4, the latter is seen to be fluctuating between
36% and 21% of the total value of EPZ exports, averaging around 28%
for the period from 1984 to 1990. This might suggest that the 32%
dutiable portion of 9802.00.80 EPZ garment and textile imports
shown in TABLE 2 may contain value added outside the Dominican
Republic.
In summary, it is evident from TABLES 1-3 that garment and
textile output from EPZs in the Dominican Republic is heavily
influenced by Section 9802.00.80 of the US Tariff Schedule, of
which quota provision 9802.00.8010 is the mdst favorable. This has
a restrictive effect on the value added in Dominican EPZs, where US
content accouncs for 68% of the total value of 9802.00.80 exports
of textile, apparel and footwear from that country. This leaves
32% of the value of these exports which is added outside the US.
Although precise estimates are difficult to obtain, this 32% may
not originate entirely from the Dominican Republic, since the
possibility exists that other countries may have contributed some
value to these exports. While the high US content is likely due to
the high percentage of 9802.00.80 exports subject to GALS
(9802.00.8010), other 'regular' 9802.00.80 exporters may be using
inputs (such as cloth formed but not cut) from other places like
the Far East. On the other hand, estimates of value added in
DREPZs calculated from Dominican sources seem to average around
28%, which is slightly higher than the previ'ously cited World
Bank's proportion of 25%. This figure is still low and attests to
limited backward linkages with the domestic economy as will be
shown in the next section.
2.2 Backward Linkages
The lack of backward linkages among EPZ firms in the Dominican
Republic has been well documented to the extent that it is now
widely recognised as a major shortcoming of the country's overall
EPZ strategy. Efforts aimed at improving the situation have been
initiated in the past from several different quarters but have yet *1( w r ., q t m r soy t'* , ' I~C'
to produce significant results according to the findings of the
present survey. In short, the situation seems to have changed
little from th3t which prevailed in January and February of 1989,
when a survey of linkages in the EPZs of the Dominican Republic was
carried out for the US Agency for International Development (ISTI-
USAID) . l 2
ISTI (89) was undertaken only about two and a half years prior
to the survey for the present study, a lapse of time too brief for
initiatives to bear fruit. Nevertheless, ISTI (89) found little
evidence of backward linkages among EPZ firms other than tobacco;
a finding mirrored by the pre&ent survey (see below). Similarly,
what was purchased at the time belonged mainly to the realm of
office supplies, construction and other disposable materials (much
of, which had a high import content), as opposed to the realm of
production inputs:
The . . . purchases from FTZ firms can be grouped into four categories: (1) Set-up materials: cement, sand, work benches, off ice furniture (mostly one time purchases) ; (2) Office supplies: stationary, etc.; (3) Energy: utilities and gasoline; and (4) Direct production input:
l 2 International Science and Technology Institute, Inc., ' Dominican Republic: initial assessment oT the potential for backward linkages with free trade zones', Washington D.C.:ISTI, Feb., 1989.
extremely limited and often on an emergency basis. 13
The persistence of this state of affairs, documented in the current
survey, is due to reasons similar to those noted in ISTI (89).
Uncompetitive prices, poor quality, and unreliable deliveries were
all cited as reasons for a lack of local purchases, in addition to
the restrictive effect of U.S. trade laws discussed earlier. This
was especially the case regarding production inputs, where the
current survey turned up negligible evidence of linkages with the
economy outside the EPZ sector. As evidenced in FIGURE 1, most
purchases from the local economy. consist of off ice supplies
(41.3%), and maintenance and cleaning materials' (28.3%), but even f
in the realm of office furniture, local costs reportedly are high.
One manager exclaimed that he could purchase the same office
furniture for one third the price an the unite& States. 6 5 x
FIGURE *-I : Local Goods Purchases By Survey Participants
j i i :
Carton . . i 5 ! . .
Machine Spares O ~ . . . -
: :
0 Production' Inputs
i I I j Maintenance 1 . . I
Percentage of Sample
According to survey results, those firms that did make local
purchases of office supplies and maintenance materials cut across
most EPZ industrial sectors. Of the 19 sample operations that
purchased office materials, 14 were from the garment sector (ISIC.
3220), two from the electronics sector (ISIC. 3832), and one each
l 3 ISTI, February 1989: 3.
representing footwear (3240), machine-tools (3821), and medical
equipment ( 385 1) . Local purchases of products for maintenance
purposes occurred in ten garment operations, two electronics and a
medical products firm. The most instructive survey finding on this
issue, however, concerned the purchase locally of production
inputs.
Although the use of local inputs for the production process
remains negligible, w e n within some operations acknowledging such
purchases, a total of seven sample firms did undertake such I , , . . - , r v * .A z.rt.1 y* ' N " .
purchases. What is interesting is the total absence of garment
operations among the EPZ clientele for local inputs. This should
come as no surprise, given the existing quota system for garments
and textiles under US 9802.00.80 (see Section 2.1); a constraint
also recognised in the I S T I study.14 'prominent among the EPZ
purchasers of local production inputs were all three tobacco firms
surveyed, which acknowledged the use of local tobacco, ususally in
conjunction with tobacco from other countries, for cigar
production. This industry was followed by the shoe sector, with
two firms purchasing some inputs from local sources. Of these two,
one firm (No. 32) purchased certain specialty items which, taken
together, did not surpass 5% of total production inputs. On the
other hand, the seccnd operation (No. 39) purchased 15% of inputs
locally, including leather and dyes. A jewellery operation (No. 2)
was the only remaining sample operation using a substantial 40% of
production inputs from local sources. It therefore appears that
the EPZ garment sect-or is more likely than the rest of the DREPZ
industrial sectors to acquire all inputs externally.
In relation to other purchases, successively smaller
percentages of the sample of EPZ operations surveyed purchased
machine spares (13%), cartons and packaging materials ( 9 % ) , or
tools (2%) 1oc:ally. This is surprisingly low, considering the
-- l 4 ISTI, I'ebruary 1989: 4.
expressed willingness of EPZ entrepreneurs to purchase these items
locally. l s This also indicates an unfulfilled potential of the
DREPZ sector; an observation compounded by reports that some local
purchases of supplies occur within the EPZ sector, thus further
restricting the potential multiplier effect on the economy.
TABLE 5 Contingency Table Analysis of: Any Local Purchases By Industrial Sector
Chi-Square Statistic: 0.41723 Degrees of Freedom: 1 Not Significant
Tests were conducted success~ully on whether there were any sectoral determinants of all iocal acquisitions, including
purchases of machine tools, car ! ons, spare parts, office and maintenance equipment and suppli& - in addidon to production
4 inputs. Given the importance of garment operations in the sample,
i t
only this sector was compared with the non-garment sector in
general. It was found that no statistically significant
relationship exists between 'any lbcal purchasest and whether the
operation belongs to the garment Actor or not (see TABLE 5). In
short, it can be concluded that garment operations are as likely as
non-garment EPZ operations to purchase local products. However,
when production inputs are considered alone, the garment sector is
clearly found lacking, although no statistical tests could be
applied in this instance. The overall scenario . is in stark
Row Total 28 18 46
'* Ibid.: 11-12.
2. Non-Garment 12 6 18
1. Yes 2. No Column Total
1. Garment 16 12 28
contrast to the Korean case where locally sourced raw materials as
a proportion of total raw materials had increased among EPZ firms
from 2.36% in 1970 to 34% in 1986.16
To complete the picture, it is necessary to determine what
services are sought by EPZ firms in the Dominican Republic since
these also contribute to employment and foreign exchange earnings.
The section of the survey pertaining to locally purchased services
yielded results that showed these linkages to be even weaker
overall than those concerning goods, discussed above. . ,, #,, , . . 8.e r r . .I%.,.' q "4 . ;,! . !
2.3 DREPZ Linkages with the Services Sector
Although possibly not contributing as much value historically
to the economies of host countries as the purchase of goods, EPZ
purchases of services nevertheless merit consideration. In the
case of the Dcminican Republic, ISTI (89) highlights the growing
importance of Local services for the EPZ sector:
. . . FTZ firms do purchase some services from the local economy such as those provided by banks, customs brokers, insurance, communication and support services such as repairs and transportation. These are expected to grow over time . l 7
Whereas the use of domestic (non-EPZ) sector services by the EPZ
sector may have received little or no attention in the past (in the
literature on EPZs), this state of affairs seems to be changing.
Recent worldwide trends that favor the adoption of flexible
manufacturing techniques have bestowed a renewed importance on the
services sectcr in general. In addition to creating jobs and
generating foreign exchange, certain categories of services known
as 'productive services' are sought by firms (although admittedly
l6 Ki-suk Lee, Manik Hwang, Hae-un Rii, 'Social and economic impact of free expcrt zones on regional communities in Korea', draft of final repoi-t, Dept. of Geography, College of Education, Seoul National University, May, 1987: 211. '
' 7 ISTI, I'ebruary 1989: 3.
of mainly industrial country origin) intent on making the
transition from mass-production to flexible specialisation. la The
benefits of such a transition accrue most visibly in a deepening of
value added, which also leads to increased generation of foreign
exchange.
Given the precedence of organisational change over the
acquisition of technologically sophisticated machinery under the
new competitive conditions favoring flexible specialisation,
attention is increasingly turning towards the role of these ., 86,. ,,*+.*l8,, fq .#I,, IS,* t.G1,'4
productive services. They esserltially comprise I... a set of
specialised firms providing services to other sectors which are
designed to enhance the process of value added in produ~tion.~'~
Included among these are services aimed at disseminating advanced
manufacturing technologies and techniques (AMT) such as the
implementation of Just-in-Time production and Total Quality
Control. Othar services include product design and marketing
expertise, financial services, and training programs. Despite the
unlikelihood that the difusion of AMT services would be widespread
in the Dominican Republic, it was nevertheless decided to ascertain
the extent of che use of services in general by EPZ firms.
The local consultancy base within the country is reportedly
quite strong, comprising around 150 companies and between 600 and
800 individual consultants. *' According to Howard Rush, these
services can be broken down into the following three categories:
l a see IDSIUNDP, 'An industrial strategy for the Dominican Republic: main reportf, Institute of Development Studies, University of Sussex, June 1991: 39-40.
Ibid. :
'O Howard Rush, 'The productive services sector in the Dominican Republic: a strategy for restructuringt, Institute of Development Stldies, University of Sussex, June 1991: 18.
1.) General management - organisational and production systems planning; programming and control; systems for inventory, storage and purchasing ; maintenance sytems ; technical information systems; assistance with registration of capital equipment; the development of procedural manuals, forms and systems aimed at standardising activities within the firms; personnel administrative systems, including recruitment, training, compensation systems, job evaluations, salary structures; 2) Financial Systems - a full range of audit and accountancy activities; 3) Engineering - primarily in the areas of civil engineering, but also electric, mechanical and design. 2 1
Notwithstanding a strong consultancy -.ba6eS, .3.11knowledge of the AMT
mentioned above was reportedly lacking or at best superficial
within the local conmunity. 22 Based on this information, it was
decided to proceed to question EPZ firm managers about the use of
the three abovementioned categories of services. Excluded from the
poll were utilities (water, electricity/petrol) and transport
services which are more or less obligatory recurring local
expenditures. As anticipated by Rush, local consultancy services
are not in great demand within the EPZ sector.
Legal assistance and engineering are the two leading services
most frequently utilised by EPZ entrepreneurs, according to survey
results presented in FIGURE 2, despite the fact that they were only
sought by ten and five EPZ sample operations, respectively. These
are followed by financial and accounting services, worker training
and electricity generating services. The last item, which overlaps
somewhat with engineering, drew its importance from the critical
energy situation in the country at the time of the survey (a
situation which has since improved). Most firms appeared to rely
on expertise from overseas parent firms or partners, with most
managers either unaware or reluctant to use local consultants. On
the surface, this seemed particularly the case regarding worker
2' Ibid.
i2 -- Ibid.: 19.
2: Use of Local Services By Survey Participants
Ela
I 10% 30% I
50% Percentage of Sample
training, with most firms resorting to in-house training methods
rather than entering into training agreements with local vocational
and technical schools.
While statistical tests of association were not applicable to
most of these cases, nevertheless 'total purchases1 of local
services by DREPZ operations was'found to not' be significantly
related to whether the operation bilonged to the garment sector or
not (see TABLE 6). Thus, there is no tendency for garment
operations to make use of these services any more than enterprises
belonging to the non-garment sector.
3. Employee Recruitment Criteria
In this section, employee recuitment criteria is examined, in
part, as an indicator of the quality of employment offered by EPZ
enterprises. It is also assumed that lower value-added production
is related to certain 'qualitative' labour force aspects such as
gender, age, and years of scholarity (or even in some cases
literacy) . *
According to the literature on EPZs, gender is just one of
several criteria used by managers in the recruitment of workers for
TABLE 6 Contingency Table Analysis of: Purchases of Any Services By Industrial Sector
1. Garment 2. Non-Garment Row Total 1. Yes 14 8 22
Column Total 28 18 46
Chi-Square Statistic: 0.13552 Degrees of Freedom: 1 Not Significant
different job categories. At the operator level, gender is often
considered in conjunction with a series of other characteristics
which taken together have generated controversy:
Faced with large pools of unemployed workers who have limited alternatives, EPZ operators can discriminate in hiring and recruit from the most vulnerable groups (ie. those they can control most easily). In most assembly operations, a preference is shown for new erltrants to the labour force (first time employment iri the formal economy), young and unmarried persons, cooperative (ie. non-union) individuals and women. 23 >
! %
Managers were thus questioned I on a range ok different worker b
characteristics to see how their kelative importance varied over
different job categories. The findings presented here generally
confirm the low-skill quality of tlie majority of EPZ jobs.
Managers were asked to state whether each of seven preselected
hiring criteria constituted a requisite, or a highly, moderately or
slightly desireable characteristic, or not a criteria at all in the
selection of workers for the four major job categories of machine
operator, supervisor, technician/engineer, and administrative
23 Gregory Schoepfle, 'Labor standard& in export assembly operations in Mexico and the Caribbean1, Bureau of International Labor Affairs, U.S. Department of Labor, June 1990: 9.
personnel. In some cases, these categories turned out to be too
general for a single response, especially when it came to upper
level employees. 24
The criteria put forth for consideration by employers included
were such diverse characteristics as educational qualifications,
marital status, age, and previous experience of the 'ideal
employeef. The controversial nature, alluded to earlier, of
characterisitics such as age and gender discouraged some managers
from responding altogether, thus creatinv . ,,., l. ... , difficulties I . , . t . ? ..r,..I*, ,' when it came
to interpretiny the results. The number of responses recorded for
each criteria varied from firm to firm. Added to this was the
problem alluded to sarlier of generality of the job categories.
FIGURES 3-6 sumn~aris:e the principal findings with N representing
the number of observations recorded for each criteria.
3.1 Machine Operators
The general occupational category of machine operator, which
accounts for the largest number of EPZ workers, is associated with
the lowest skill requirement. In terms of schooling, nearly 21% of
the 43 respondents said they had either a requirement or strong
preference for operators with some level of formal education. This
contrasts with 5 6 . 8 % , 9 1 . 9 % , and 94.1% of reGpondents for the
categories of supervisor, technican/engineer, and administrative
personnel, respectively. This is based on 44 responses for the
supervisor category, 37 for the technidian/engineer category and 34
for the administrative
ersonnel category. Those that answered in the.. affirmative with
24 For exampls, when qualifications for administrative personnel are considered, a secretary will be hired on different criteria than a payroll clerk. Similarly, a number of firms had at least one administrative position which required knowledge of the English language. Hence an English requisite could not be generalised oKrer the whole administrative' personnel category. Despite these caveats, useful information was obtained concerning hiring practices in most EPZ firms included in the survey.
regard to the 'operatorf category, tended to require either
completion of highschool or attainment of a specified grade level.
FIGURE 3 .. Hir ing C r i t e r i a f o r Operators
Gender
0% ' 20% ' 40% ' 60% 80% 100% 10% 30% 50% 70% 90%
% Cing as Requisite/Highly Desireable
The majority of managers requiring some' I level of formal
education from candidates for the operator position belonged to the
electronics and medical products sectors. All but one electronics
firm {ISIC 3832 & 3831) had a requirement or strong preference for
operators with either a highschool diploma or an eighth grade level 1
education. Similar findings have been obtained from previous
surveys of electronics firms operating in Dominican EPZs . 25 The It
manager of one firm involved in the assembly of transformer bobbins
explained that he could afford to be selective in this respect
given that there was an oversupply of educated operators. It is
important to note that most of the more sophisticated industries
surveyed were located in the 'high-endf EPZ of Itabo which offers
recruitment services to enterprises as well as a close working
relationship with one of the more prestigious educational
institutes in the country. Outside these industries, only the head
of personnel of a long established subsidiary of a US garment
operation said she had a strong preference for operators with a
25 International Science and Technology Institute, Inc., Meetinq Labor Needs of Industrial Free ~ohes in the Dominican Republic: Assessment of Trainins Needs and Resources, Washington D.C.:ISTI, May, 1988: 53.
second year highschool education. This was the only sample garment
firm with such a recruitment policy for operators.
If one looks at the importance of the schooling 'attribute' in
general for prospective operators in sample operations across DREPZ
industrial sectors, it is evident that the garment sector
significantly places less importance on this requirement. Only two
out of 27 garment enterprises had either a requirement, or strongly
favored hiring operators with a given level of formal education, in
contrast with 7 out of 16 enterprises for the non-garment sector. s r r , . , 8 ,.I! " 1 .'I, D ' .. . 1.) !
A s far as capital ownership was concerned, 9 of 34 operations with
100% US capital were found to have schooling requirements for
operators, while non2 of the 9 non-US operations had any schooling
requirement. 110 statistical tests of association were applicable
in this instance, however.
Contrary to Schoepflels ob~ervations*~, marital status was
not considered an important critera by the 44 respondents to that
survey question. Neither was knowledge of the English language
considered even slightly important for an equal number of
respondents. However, a willingness to work a flexible work
schedule was the third most important of the seven criteria
submitted for consideration of employers, with 32% of 41
respondents saying this was either a requisite or highly desireable
criteria. Flexible work schedule, as defined in the survey
entailed everything for working different shifts when asked by
management to working on weekends and putting in extra time on
demand. It is understood that workers declining to work different
or extended hours on demand in firms with this policy would
summarily be fired.
A significant number of enterprises (almost 40% of 43
respondents) sought operators with previous experience. These
understandably tended to be firms with no formal training programs.
Although the figure may seem high, it represents a drop from the
60% figure recorded in a survey conducted in the first quarter of
1988. In reference to the category of unskilled workers, this
study concluded: 'It would appear that employers prefer to hire
people with experience gained in other firms because OJT [on the
job training] is so t.ime consuming and expensive, and because there
are so few available training resources for this sector.f27
Although the present survey did not include a question on the , I . . I
reasons for a preference or not for experienced employees in any of
the major job categories, some managers nevertheless offered
insights into their policy. In particular, the manager of one
large garment operation ( h 34) reported abandoning it's formal in-
plant training program (thus implementing a requirement for
previous exper~ence) because it did not seem to pay off. Among the
reasons cited for this was a rather high monthly turnover rate of
15% among operators. In contrast to this, the manager of one
medium size garment assembler (operation # 29) expressed a
preference for training his own operators, adding: 'if they have
had previous experience, we cautiously ask why they left their
previous job.
The only other firm which had a preference for untrained
employees was a small tobacco firm (operation t 38) dedicated
solely to the scripping of tobacco. In this case, the manager
explained that the stripping process was mechanised, hence the
company's preference for teaching their operators. A second medium
size tobacco operation involved solely in the production of cigars
had a preference for experienced manual labourers but only in the
sub-category of 'support operations.' The manager of this
operation, whi-h was located in the Santiago EPZ, clarified that
inexperienced applicants for the manual labour position were
27 ISTI, 1988: 3 6 .
expected to be young enough to be trained, whereas older applicants
were required to have experience. He added that although the
Dominican Republic was 'eminently a tobacco producing region', a
lack of qualified labourers in Santiago sometimes obliged the
company to send for qualified people in the neighboring town of
Tamboril .
Continuing with the question of age, it is difficult to
establish if rhere is a deliberate policy to hire very young
workers based on the information obtained through the survey. Even - ,.as rr,, .r.r4.4*-7.7, .., .r-' '
among the nearly 21% (of 43 respondents) acknowledging that age was
an important criteria, a common response was that the requirement
or preferred age for operators was between 18 and 40.
Further questions aimed at establishing the average age of
different level employees did not elicit clear responses either.
Managers again tended to give a wide range of answers, claiming not
to ha-ve precise averages or medians at their disposal. Previous
studies have concluded that the average age of EPZ employees in the
Dominican Republic is 27 years with 70 % of the workforce being
between the ages of 20 and 35 years of age.28 One electronics
assembly firm (operation t 45)'which had undertaken a survey of its employees just prior to the interview reported the average age to
be 27 years for the whole plant.
Although re2sons for preferring a youthful labour force were
not offered, on one occasion the manager of a large garment firm
(operation # 26) explained in general terms that the older
applicants were turned down because eyesight tends to deteriorate
with age. A 1985 study on E P Z s concludes that electronics firms in
particular are reluctant to hire women over the age of 25 'because
*a Consultoras Asociadas S.A. (CONSA) , ' 'Estudio sobre zonas francas y mano de obra femenina en el Caribe: el caso de la Republics D~rninicana', Santo Domingo: CONSA, April 1989: 37.
of the intensity of work and the eyestrain involved.. . . ' 2 9 This
seems to have been the case with respect to a medium size breakers
and circuitboards assembler (operation # 12). The manager of this
operation expressed a mild preference for operators youger than 20
years of age, although he offered no precise explanation.
However, despite these responses suggesting that age was not
a near-requisite hiring criteria, one need only to stand at the
gates of any EPZ at the beginning or end of the working day to
witness the vast army of youthful operators marching to or from & f<,.*l> "P ..lft~', '9 .T,e .* .-,,,
their workplaces30, some with text books in hand for their night
classes. Althaugh managers were not questioned on the number of
students employed at their factory, several acknowledged a
significant presence of students of different levels among their
employees. The use of overqualified personnel for low-skilled jobs
has been noted in other studies for its de-skilling effect over
these workers .jl
Just under half of 44 respondents specified additional
criteria which are very important in the selection process for operators. Of the 21 managers citing other criteria, 13 required
operators to just be able to read or write, while two stressed the
importance of a letter of recommendation. A firm involved in the
process of stripping tobacco required operators to add and subtract
in addition to read and write, while one jewellery firm and a
garment operaticn both required a certificate of good behavior.
Among the other requirements mentioned during the survey were a
29 Jean Currie, 'Export processing zones in the 1 9 8 0 ~ ' ~ Economist Intelliqence Unit S~ecial Report No. 190, London: Economist Publications Ltd., 1985: 35.
30 see for example: 'Juventud predomina zona francat, Zona Franca Ilustra~3a, Year 1, No. 4, June, 1991: 5. -
' I Isis Dcarte, Trabajadores urbanos: ErFsayos sobre la fuerza laboral en Republicn Dominicans, colaboracion de Andre Corten y Francis Pou, Santo Corningo: U.A.S.D.: 1986.
visual test, a non-pregnancy certificate, and a manual dexterity
test. The latter was cited during three interviews by an
electronics assembly firm, a cigar producer, and a lady's brassiere
firm. The manager of another jewellery operation said he required
his operators be disciplined and hard workers although it was not
clear how these attributes were identified in potential candidates.
Finally, one large operation involved in the production of leather
shoe uppers explained that operators had to pass a simple exam
based on a puzzle which was at the competency level of 4 to 6
yearold childrm.
3.2 Supervisors
Perhaps the most interesting phenomenon related to the hiring
of supervisors is the practice of promoting personnel from the
production line. Eighteen out 'of the 46 managers interviewed
indicated that some promotion of operators to the supervisor
category is done in their enterprises. ~ l t h o u ~ h no reasons were
given- for this practice, which may have been more widespread
throughout the sample than was observed, one poskible explanation
may be a lack of qualified personnel in the country. A 1988
assessment of EPZ firm training needs and resources in the
Dominican Republic seems to indicate a premium was paid at the time
for qualified supervisory personnel. Given the expansion of both
existing plants and the arrival of new firms since then, the
problem may ha71e co~tinued or even become more acute.
The study, vhich was based on a survey of nearly two thirds of
the EPZ firm population, concluded that 'supervisory training, with
an emphasis on human relations skills, is the most critical
training need for the majority of all firms (60%). . . . 13* The
study goes on to note that:
Supervisory training is a much more serious need for medium (70%) and smaller (62.2%) firms. This may be .
- - --
32 ISTI, 1938: 30.
explained by the fact that in larger firms there is more job specictlization, whereas in smaller and medium firms, supervisors tend to be technical personnel or operators who have been promoted through the ranks and have received little training in managing production processes and personnel. Larger firms, in turn, can afford to hire higher level skill supervisory personnel who manage a greater number of employees. 33
In relation to this topic, the findings of the present survey differ in certain aspects from those of the ISTI study. Almost
half of all large firms were found to be doing some promoting from
the production line, while only 36% and 27% of medium and small :, ,,'..,"".'C.!#'*"' F ! ' . ( L C..' . firms, respect ively, acknowledge$' such 34 Neither were
such line prom~tions restricted to any one industry. Among those
acknowledging such practices were 12 garment operations, two
footwear firms, two breakers and circuitboard firms, one jewellery
operation and a paper products firm. Any comparison, however, of
the present findings with those of the ISTI study-should be treated 1 I
with caution as zipproximately 80% of the ISTI sample was composed
of small and mediun sized firms, while more than half of all
enterprises included in the present survey were !large operations.
It is likely that some firms which were small or medium sized at
the time of the ISTI survey have since grown into large operations
thereby reducing the pool of small and medium sczed operations. 35
As evidenced in FIGURE 4, the most important criteria applied
in the recruitment of supervisors is previous experience (71.4% of
42 respondents) and a willingness to work a flexible schedule
( G 8 . 2 % of 44 respor~dents), followed by schooling (56.8% of 44
respondents). it should be mentioned that an equal number of
managers (30) lnswered in the affirmative to the questions on
33 Ibid.
3 4 These proportions were based on current employment rather than capacity of plant. .
whether experience and willingness to work a flexible schedule were
requisites or highly desireable attributes for prospective
FIGURE 4 Hiring Criteria for Supervisors
Other Flex Sched
English
Marital I
- C- ~ = 4 2 i 8 - . .- I
Schooling I
. - 10% 30% 50% 70% 90%
% Citing as RequisitelHighly Desireable
supervisors. Although marital status turned out to be of no great
importance, two firms acknowledged a mild preference for married
candidates given that they are perceived as being 'more
resposible.' It should be noted that these two firms in particular
also favored men for the supervisory position suggesting that
married males may be perceived as being more ieliable employees
than married females.
Overall, a marked preference for male supervisors was
confirmed among the few employers acknowledging the importance of
gender in the recruitment process of their firms (9.1% of 44
respondents). A mild to moderate preference for male supervisors
was registered in 5 additional operations with two of these also
employing a majority of males in the operator category. On the
other hand, the manager of a US telecommunications equipment
subsidiary cited his company's strict observance of that country's
'equality clauset, whereas only two garment operations registered
a mild preference for female supervisors with one manager putting 1,
forth the 'female industryt argument as a justification.
A knowledge of the English language was important in four out
of the five breakers and circuitboard operations as well as in one
intravenous sets producer and a tobacco stripping plant. The
reason for this lies in a tendency for the supervisory category to
contain some technical and engineering personnel, as will be shown
further on. The ISTI study cites the need for industrial mechanics
in particular to be able to read technical manuals in ~ n ~ l i s h . ~ ~
This was confirmed in at least one interview (operation # 12)
carried out for the present study where a manager required both a formal education background in electronics and a knowledge of . ... ,..*, I,.,. ,..r,q .',.. English from applicants for the supervisory position. He explained
that English was highly desireable because of the extensive use of
'automatic equipment' in the factory.
A formal education background was cited as a requisite or
highly desireable attribute for potential supervisors in 57% of the
pool of 44 respondents. Out of these, 13 employers singled out a
highschool diploma as the only requisite or highly desireable
attribute, while another 3 would accept candidates who were working
towards getting their highschool degree. One manager said an
eighth grade education would suffice while another simply cited an
'academic degreef without go'ing into detail. The remaining 7
expected candidates to have undertaken studies beyond highschool
whether these were in technical studies or university level
training.
Statistical tests applied to the supervisor category turned up
no significant difference between the DREPZ garment and non-garment
sectors regarding the formal education criteria for prospective
supervisors. Neither was there any significant relationship on the
basis of size of operation (see TABLES 7 & 8 ) . 37 Essentially, it
can be concluded that the importance of educational criteria for
hiring prospective supervisors does not vary significantly across
industrial sectors, nor across operations of different sizes.
TABLE 7 Contingency Table Analysis of: Formal Educational Hiring Requirement - Supervisor By Survey Industry
Chi-Square Statistic: 0.33083 Degrees of Freedom: 1 Not Significant
TABLE 8 Contingency Table Analysis of: Formal Educational Hiring Requirement - Supervisor By Size of Opera tion
Row Total 25 19 44
Chi-Square Statistic: 2.25845 Degrees of Freedam: 2 Not Significant
2. Non-Garment Sectors 10 6 16
1. Required 2. Not Required Column Total
In the cases of operations where engineering and/or technical
personnel laboured under the supervisor categbry, the required
training was specified. In particular, a medium sized US
subsidiary involved in the assembly of thermoprotectors and
telephone parts said that professional engineers were highly
desirable candidates, while a second medium sized telephone and
1.Garment Sector 15 13 28
Row Total 25 19 44
37 Although not many statistical tests of association could be carried out with respect to size of operatiod or other attributes, given that the number of cells with expected values less than 5 often exceeded the acceptable limit, in this case it was possible.
1. Required 2. Not Required Column Total
2. Medium 5 7 12
1. Small 8 3 11 .
3. Large 12 9
2 1
communications equipment assembler required that their supervisors
be electronics technicians. A small assembler of transformer
bobbins required applicants to be professional electromechanics
with a minimun three years of experience. All three of these
operations were located in the 'high-end' Itabo EPZ which offered
among its services, n screening of applicants based on the needs of
each particular operation.
The age factor was of minimal importance overall with just
three out of 43 respondents (7%) citing either a minimum age ., " .. 1 - 1 1 . 1 .. 1, 1 .,
requirement or averaye. The machine-tools producer cited a minimum
age of 30 while a garment operation cited an average age of 27
years. The mznager of the third operation was ambiguous saying
only thaz the super\risory candidate had to be 'more mature' than
the average opsrstor.
Finally, alaost a third of the 44 managers that responded to
the questions concerning supervisory qualifications, mentioned
additional qualities which were important for the position. Of
these, 7 specified abilities involving human relations, such as
communications skills, a vocation to: manage people, a motivator;
and in one case a for-ma1 course in human relations. The manager of
a jewellery erlterprise simply said that the supervisors had to
'prove themselves', although he did not go into detail. Two
garment operation managers mentioned math skills while 5 said
supervisors sh3uld be able to read and write. Only one garment
firm required the taking of an exam specifically for sewing
supervisors.
3.3 Engineers and Technicians
There was some difficulty in ascertaining the criteria used to
recruit engineers and technical personnel. This stemmed from
the fact that the criteria varied somewhat among the different L
positions included in the category. Where it was impossible to
generalise over the whole category, it was either recorded that the
FIGURE 5 Hiring Criteria for ~echnician/~ngineer
1 0% 30% 50% 70Yo 90% % Citing as RequisiteIHighly Desireable
qualification depended on the specific position or it was left out
all together, which partially explains the reduced number of
observations in the category. The other reasons for the reduced
number of observations involve the non-applicability of the
category in some cases as well as the broad interpretation t given to
the category by some managers. In this respect, 'the present survey
came up against some of the problems encounteredgby the ISTI survey
cited in the previous section. 38
Only two managers out of 36 (5.6%) had a sixong preference or
requirement for male candidates to fill the position of
technician/engineer in their firms. One of these respondents was
the manager of the small machine-tools manufacturing firm which employed no operators. This person responded that males, were
required because of the 'nature of the work1. A third manager
(operation # 9), for whom no response was recorded, said that
gender was important depending on the specific position in
quest ion.
38 ISTI, 1988: 2 2 .
Also of minimal importance in the selection of workers for the
category of tcchnician/engineer was marital status (2.6% of 38
respondents) and age (10.5% of 38 respondents). Married candidates
proved highly desireable in the single case recorded, as the
manager considered them to be more responsible. Similarly, the
manager of a large garment assembler expressed a moderate
preference for married personnel, possibly for the same reason.
With regard to age, one garment firm manager had a strong
preference for employees between 22 , . and. ... . 3,O- years of age, while
another preferred those within a more narrow range of 32 to 33
years. The machine cools manufacturer had a strong preference for
experienced workers ,.vithin a rather wide range of 22 to 45 years of
age. This enterprise could probably not afford to be too selective
with regard to age since it had to resort to transporting some of
its technicians and supervisors to it's locale in La Romana from
the capital (70 miles away) or from the neighboring town of San
Pedro- de Macoris (about 30 miles distance) due to a scarcity of
qualified personnel in the area. Although most firms appeared to
prefer young candidates, yet others appeared to favor older more
experienced candidat-es. In particular, a small women's garment
assembler requlred their job applicants to be over 40 years of age.
In contrast the head of personnel of another garment firm
(operation # 4 ) , despite claiming that age was not a criteria,
nevertheless required candidates to be recent university graduates
with no previous experience in order to 'give them training'.
Experience was not always seen as a desireable quality because, as
one manager put it, 'sometimes it takes time for the person to
unlearn had pr3ctices picked up in his or her previous job.'
Nonetheless, experience was cited as either a requisite or a
highly desireable quality for technical and engineering candidates
by plant managers in 21 of 35 operations (60%) for which responses *
were obtained. The low number of respondents registered was due,
as mentioned above, to the fact that distinctions were sometimes
made among criteria for different positions within the category.
It was thus decided to record no response for the majority of these
cases. One large garment contractor ( # 34) said that mechanics in
his firm were required to have experience but not engineers, a
policy which was echoed by a second small garment operation ( # 9).
A third large garment operation ( # 25) required technicians in
general to have experience but not engineers, while the manager of
a medium size garment operation ( # 24) highlighted a distinction
among its technicians. He required technicians that headed
departments to have experience but not auxiliary technicians. In ... . I. - r r r ,,,. l r r r ..-., . other cases where distinctions were made, managers simply said it
depended on the position, without offering more details.
As might be expected, formal schooling turned out to be the
most important criteria applied in the case of engineers and
technical pers~nnel. Here, a total of 34 out bf 37 respondents
(92%) acknowledged the importance of educational qualifications,
whether they be at the university level or in some specialised
technical field. The extent and type of schooling was determined
by the specific job position. In general, engineers were expected
to have their engineering degree while technicians and mechanics
were required to have taken certain technical courses related to
their area. One large garment operation required quality control
personnel to hcve their highschool diploma, but again most managers
did not have the time to detail the academic qualifications for
each specific position.
Next in importance for the recruitment of this category of
workers was a ~~illingness to work a flexible schedule. A total of
27 out of 37employers cited this as a h'ighly desireable
characteristic or requisite for gaining employment in the
engineering/te3hnical category. Knowledge of English, on the other
hand, was required in just 10 out of 39 cases. The reasons, as . noted previously, had to do with the machinery manuals being
written in this language.
Few managers (just 4) added additional criteria to the seven
specified in the questionaire. A s noted earlier, one garment firm
required their engineers and technicians to be recent graduates so
they could be trained according to the needs of the firm. The
other attributes included ability in mechanics, human relations
abilities and honesty, although it was unclear how the latter would
be ascertained in an applicant.
3.4 Administrative Personnel
The analysis of recruitment criteria for this category of ".If..,,,' ' " 9 P P P ' M *,.**.",R '
workers posed the greatest difficulties for the author for much
same reasons encountered in the analysis of the
technical/engineering category. Here the spectrum of workers was
probably much wider, combining such diverse subcategories as
managerial and secretarial personnel. Also, it was difficult to
generalise about different positions such as accountant and head of
personnel. -\lthough initially it was intended to include
management in this category, most employers proved reluctant to
offer much information concerning these. Hence, much of the
information regarding recruitment of administrative personnel
applies mostly to secretarial staff. Overall, the responses to the
specific criteria corresponding to the administrative job category
varied so greatly in some instances that only very general
conclusions can be drawn, and even these should be treated with
caution.
Gender was relatively important with just under a quarter of
the 36 respondents singling this out as an important criteria.
Women were preferred in all but one case, (no explanation was
offered for this exception). The most important criteria for
hiring administrative personnel was schooling followed by
experience and a knowledge of the English language. Half of 38
respondents also placed importance on a willingness to work a
flexible work schedule. The academic qualifications were
difficult to ascsrtain over such a broad category, while English
FIGURE 6 Hiring criteria f o r Adm. personnel
0 t h e r P ~ =39 I Flex Sched
English -
1 / ! N= observations ( I Marital
I j
a '= Experience S .- G
Schooling
1 0% 30% 50% 70% 90% % Citing as RequisiteIHighly Desireable
I
was not required of candidates for all positions in some cases.
Age, -where important tended to be less than 40 years of age.
Finally, just one case registered an additional criteria and this
was ability to read, write and type. The low.leve1 of response
here was because no doubt other respondents t&ok it for granted that this was a requisite criteria.
4. Conclusions
In summary, it can be said that the majority of operations
located in the EPZs of the Dominican Republic lack significant
backward linkages with the domestic economv for reasons of
restrictive market entry requirements in the chief market
destination (namely the U. S .A. ) . In particular, Section
9802.00.8010 of the US Tariff Schedule distorts international trade
by fostering firm-level backward linkages between Caribbean
suppliers and the US to the detriment of national or regional or
just cheaper components producers in general (wherever they may be L
located) .
It should be noted, however, that the inability of national
suppliers to prcduce quality products in reliable delivery times
were raised as issues during the interviews conducted with EPZ
plant managers in the Dominican Republic. Thus an exposure to
international market prices is required (elimination of tarriff
barriers) in the Dominican Republic, accompanied by less
restrictive trade laws in the U S . Barring that, a diversification
of markets must be undertaken by the DR to reduce reliance on the
us .
. .,. . . r,,.,, ,-0 n,..., r 8,
The DREPZ garment industry in particular lacks significant
backward linkages b:ith the rest of the economy and does not
contribute sigi~ificantly to augmenting the human resource capacity
of the Dominican Republic. It has been shown that the garment
sector has very little in terms of an educational requirement for
prospective operators in relation to other sectors. .Given that it
is the largest industry, both in terms of employment and number of
firms-, within t-he DREPZ sector, this reflects negatively on the EPZ
sector as a whale.
It is evident in general from FIGURES 3-6 on recruitment
criteria that throughout the DREPZ firm hierarchy, the operator is
the least skilled in terms of the schooling requirement. At this
level, previo~s work experience, gender and ability to work a
flexible work schedule, take precedence over schooling. Although
this is less so at the supervisory level, it should be recalled
that the schocling requirement for supervisors is often to have
merely completed highschool. This contrasts with the
technical/engineering category, wherein both positions tend to
require their respective vocational or engineering degrees. Few
useful conclusions cguld be drawn from the administrative category
given the inclusion of such disparate job positions as secretary . and manager. Nevertheless, it is evident that schooling is
important here, too. In general, age and gender can be seen to
become less important while schooling becomes much more important
as one climbs the firm hierarchy, with the possible exception of
the secretarial category which appears to maintain a gender bias
towards women.
DREPZ firms operating with US capital seem to be associated
with schooling requirements at the operator level, although at a
lesser level of significance. Finally, as far as the supervisory
level is concerned, the educational criteria does not appear to
vary significantly according to industrial sector, size of a T -4 p + pg 1st' m 1 tq 9 7 3 9 w * . I
operation nor [capital origin.
Thus, the findings presented here on the lack various types of
linkages between DKEPZ operations and the local and regional
economies attest to this DREPZ sector as being a poor model or
basis for the promotion of regional integration. The DREPZ sector,
as it stands, is linked mostly with US components producers which
are rrot always the nost efficient in their respective industries
(in a world-wide context). Similarly, the process specialization
scheme under which DREPZ firms are consigned solely to the most
rudimentary assembly operations (kotorious for being of low value-
added) is likely responsible for such low educational requirements
for operators. Such enterprises have been shown to locate mainly
on the basis of labour costs, with the host country offering the
cheapest labour preferred over competing higher wage areas. This
is yet another reason to eschew this model as a basis for economic
development or r2gicnal integration.
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