9 firm that would be willing to join the zone would create some jobs, which would be better than nothing... One consequence of the absence of identification strategies was the random mushrooming of small single firms from very different types of industries. Naturally, governments could not provide them with the industry-specific infrastructure support they needed.

Many zones were exclusively developed, regulated and operated by governments or public entities. Beyond the obvious issues of expertise and capacity, that type of institutional arrangement often led to conflict of interest situations, with regulatory agencies also engaged in zone development activity, especially when public zones compete with private firms outside the zone.

Policies and privileges in the zone were severely restricted, at least in theory. Access to a generous set of privileges was often controlled by a small group of civil servants. The criteria for selecting qualifying firms were not always transparent. And when it was, it seemed too restrictive, as firms typically had to export at least 80 percent of their production. Merchandises that could be introduced duty- and tax-free by registered enterprises or individuals were restricted to direct inputs for manufacturing. Such regulations were often the source of rents.

The choice of the location was not always optimal. While some zones were built in port cities that were already growth poles or near transport hubs, others were created as isolated geographic enclaves or in remote areas, not on the basis of an economic rationale but as a way of appeasing political constituencies. This increased production and transaction costs for the few firms willing to build factories there. Such problems are likely to arise again if appropriate precautions discussed below are not taken in the design of new zones.

Reducing transaction costs was not part of the strategic focus. Because of the randomness in industry selection and the limited government financial resources, even basic infrastructure was not made available in many of these zones. Governments did not proactively play their indispensible facilitating role: they did not provide some basic industry-specific infrastructure and often waited (in vain) for qualifying firms to finance investment in electricity, water, or telecommunication within the zone. They did not coordinate the design and implementation of the investment needed and used collectively by firms in their industries (storage facilities for example). Again in retrospect, it may have been beneficial to public finance that governments did not spend even more money financing sub-optimal and unprofitable infrastructure.

As shown in investment climate surveys carried out in Africa, government officials running SEZs also did not realize that successful integration into the world economy increasingly requires the realization of behind-border measures that fall under the heading of trade facilitation. They failed to alleviate the burden of red tape and provide the type of efficient services such as customs and port efficiency. In countries such as Senegal (where an SEZ was established as early as 1974) or Cameroon, it often took more than a year for a foreign firm to obtain necessary permits to operate. They also had to deal with heavy and complex bureaucratic rules and procedures, a very high cost of infrastructure (communications, energy, water), and constraining labor regulations. In addition, they had to agree to unrealistic job creation goals and high requirements for initial investment. In many other African countries, qualifying firms that