Countries often cannot create the business environment or build the enabling infrastructure nationwide all at once due to limited resources and scarce implementation capacity. As an alternative, governments establish a "special territory" equipped with the necessary infrastructure to create a conducive business environment by removing critical constraints hindering investment flows.
The fundamental idea of an "industrial park" is that it is an industrial policy instrument, designed by the government to attract investment with the ultimate objective of achieving growth and development. Various terminologies are used to refer to such territory, including free-trade zones (FTZs), export processing zones (EPZs), special economic zones (SEZs), high-tech zones, free ports, enterprise zones, etc. Such variation in terminologies, among other reasons, is the result of differences in the objectives, functions or forms of these parks, as well as the desire of certain industrial parks or programmes to differentiate themselves.
UNIDO uses the concept “industrial park” to refer to the location-specific industrial policy instruments, often with the prefix eco, sustainable, agro, and techno (e.g. eco-industrial parks, sustainable industrial parks, agro-food parks,).
An industrial park is a tract of land developed and subdivided into plots according to a comprehensive plan with the provision of roads, transportation and public utilities, sometimes also with common facilities, for use by a group of manufacturers.
An eco-industrial parks is a dedicated area for industrial use at a suitable site that supports sustainability through the integration of social, economic,and environmental quality aspects into its siting, planning, management and operations.
An integrated agro-food park is an agribusiness development corridor integrating value chain actors with high-quality infrastructure, logistics and specialized facilities and services to create economies of scale for sustainable market-driven agribusiness development and rural transformation.
The principal rationale for implementing industrial parks/zones is to enable firms to settle and develop at a specific location that is planned and dedicated to that effect. Industrial parks are designed to attract investment, create employment and boost export by overcoming constraints that hinder industrialization processes, such as limited access to infrastructure, technology, and finance, as well as high production and transaction costs stemming from the lack of infrastructure and weak institutions outside the parks.
An industrial park is distinguished from other types of business and industrial locations, and from the simple clustering or agglomeration of industries in a specific location by the following five characteristics:
In some cases, parks or zones enjoy "special" status governed by a special regulatory regime with more liberal economic laws (often accompanied by attractive incentive packages) than those that typically prevail, regarding issues such as labor, land use, and foreign investment.
The presence of hard infrastructure - both vertical and horizontal (including utilities, telecommunications, industrial waste and wastewater treatment, landscaping, internal roads, storage units, quarantine facilities, quality control labs, etc.) and soft infrastructure (such as streamlined administrative processes through one-stop-shops, financial service, market information, training service, emergency services for firefighting and first aid, security services and other public and private services, etc.) often shared by tenants.
A geographically-delineated tract of developed land with detailed master planning that prescribes standards and specifications for all aspects of the built environment, including buildings.
Single management or administration entity to approve and accommodate the entry of new companies into the park, enforce compliance with its rules, and to provide forward planning to promote the long-term development of the park.
A multi-tenant entity that produces value-added products or services and enables symbiotic collaboration between firms and industries through the exchange of complementary resources, infrastructure and utilities.
Industrial parks are an important tool for attracting investment and technology, given that some of the key factors that influence investment decisions are the availability of land, infrastructure, quality services and proximity to strategic markets. The technology transfer opportunities that foreign investment in particular can bring to an economy are crucial to improving production capacity through the associated transition from labor-intensive to technology-intensive production that often accompanies it.
Industrial parks can provide a favorable business environment to develop the manufacturing sector and to add economic value in economies that are heavily dependent on the production of unprocessed/semi-processed agricultural products or extractive resources. Industrial parks can also be used to create backward and forward linkages where an economy’s raw materials and supplies flow to the park for processing. Agro-processing parks, for instance, have backward linkages to farmers and their raw materials, as well as forward linkages to food wholesalers, retailers and exporters.
Integrated agro-industrial parks backward linkage map:
Contributing to regional and national development is often a primary decision driver to establish industrial parks that foster new investments, industries, jobs, and linkages to the local economy.
Industrial parks, as local economic hubs and growth centres with certain positive externalities, can (when properly designed) serve as platforms for delivering on broader local community goals, such as local employment creation, as well as transportation services, education and training, health care, mail and communication services, and others.
Industrial parks create environments that foster collaboration and innovation by providing a location where the government, the private sector, universities and research institutes can collaborate as well as conduct and commercialize research and reinforce entrepreneurship. Industrial parks can also support entrepreneurs by incubating new businesses. The shared services offered by industrial parks can moreover reduce small business market entry barriers and facilitate access to seed capital.
Industrial parks can serve as a test of economic reforms, new policies and approaches in a geographically-concentrated pilot area. Their demonstration effects can, if successful, be replicated nationwide, along with the best practices drawn from these pilots.
Industrial parks can offer the opportunity to decrease production costs through common infrastructure and systems, while also leading to increased materials, water and energy efficiency, including through waste recycling, water management and resource recovery. Eco-industrial parks, in particular, can further reduce pollution and waste by applying pollution prevention, renewable energy, industrial symbiosis, and other environmental management methods and technologies.
Industrial parks support rural industrialization and the creation of industrial towns. Many industrial parks have become industrialized towns or urban districts, as employees have settled in or near them. Adjacent areas have been transformed into towns and sometimes even cities and local authorities have responded to this process by increasing urban services such as low-cost housing, medical care and education, as well as by allowing residential, retail and mixed-used zoning. The growth of commercial businesses and residential areas in or adjacent to industrial parks has meant that such places have taken on increasingly urban economic and social characteristics, with both the challenges and the opportunities that this presents for industry.
The development of competitive industrial parks is instrumental for the promotion of inclusive and sustainable industrial development (ISID), in particular in developing countries and economies in transition. This mandate is central to the achievement of the 2030 Agenda for Sustainable Development and Sustainable Development Goal 9: “Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation”, with interlinkages to support the achievement of the other SDGs. Meeting this goal requires, among others, adequate infrastructure development that can support investment in priority sectors of Member States and overcome the constraints associated with doing business in an economy.
Over the past four decades, UNIDO has been assisting its Member States and stakeholders in the planning, development and management of industrial parks around the world. Countries benefit from UNIDO’s expertise in capacity-building and technical assistance at different stages of industrial parks development. For example, UNIDO supported industrial parks development in countries across different regions (e.g. in China, Côte d’Ivoire, Ethiopia, Iraq, Nigeria and Vietnam), facilitated public-private partnerships, and helped address regulatory and institutional issues (e.g. in Côte d’Ivoire, Iraq and Nigeria).
UNIDO supported China’s early industrial park initiative
UNIDO has a long history of cooperation with China ever since the People’s Republic of China became Member of UNIDO in 1972. Cooperation between UNIDO and China on industrial parks development dates back to 1980 when the government of China decided to establish several special economic zones (SEZs) in the provinces of Guangdong and Fujian. In September 1980, UNIDO organized a six-week study tour for a Chinese delegation to benchmark the experiences of Ireland, Malaysia, Mexico, the Philippines, Singapore and Sri Lanka. This was the first Chinese delegation sent abroad to study the implementation of SEZs. This historical visit led to recommendations which contributed to the development of legislation governing the operations of China’s SEZs, and the establishment of China’s first generation SEZs.
The development of industrial parks is instrumental in the implementation of UNIDO’s integrated programmatic frameworks -- the Programme for Country Partnership (PCP) and Country Programmes (CPs). In particular, the PCP is UNIDO’s flagship multi-stakeholder platform that supports Member States to mobilize diverse partners, financial resources and knowledge in order to create the synergies that are required to promote and implement industrial development and to maximize development opportunities following the establishment of industrial parks.
Knowledge management through undertaking various scientific studies and producing technical reports, manuals, guidelines, etc. to provide necessary guidance tools to support our Member States and partners on issues related to industrial park development.
Some of UNIDO's industrial parks related publications include:
Provide technical assistance by undertaking various studies(pre)feasibility studies, Environmental and Social Impact Assessment (ESIA), resettlement plans, etc.), masterplan development, engineering design, constructions and other services aimed at environmental sustainability (law-carbon energy supply, waste management, etc.). Countries, where UNIDO is currently providing such support for industrial parks development, include Cameron, Colombia, Egypt, Ethiopia, Ghana, Guinea, Indonesia, Iraq, Kenya, Lebanon, Nigeria, Peru, Senegal, South Africa, Ukraine, Vietnam, Zambia, Zimbabwe, among others.
Support partnerships by bringing together and mobilizing diverse streams of partners (governments, development financial institutions, private sector, civil society, academia, etc), financial resources and knowledge in order to create the necessary synergies to promote and boost industrial development and to maximize growth opportunities following the establishment of industrial parks.
Capacity building and skills development to industrial parks practitioners and policy-makers through trainings, study tours, expert exchanges, peer learnings, and various simulation exercises aimed to build capacities and provide knowledge in a wide range of technical areas related to industrial parks.
Facilitate dialogue to promote knowledge exchange at the national, regional or global levels through organization of conferences, forums, workshops, etc.
Provide a normative framework that ensures adherence to international standards in areas of planning, implementation and evaluation of industrial parks initiatives.