Abstract
The negotiation and ratification of NAFTA have brought into focus the reasons for the growth of the maquiladora industry in Mexico. At question is whether the maquila industry has grown as a result of pollution abatement cost avoidance or inexpensive labor. This paper reviews the three basic methods used to address this question: surveys, pollution measurement, and historical trends. Using the latter method, computations shown here contradict an earlier study that indicated no relation between avoidance of pollution abatement costs and growth in maquiladora investment. The results presented here suggest there is a positive relation, or that as pollution abatement costs in a given industry have increased, the maquiladora investments in the same industry have grown. Thus, as NAFTA and the EPA-SEDESOL Integrated Border Environmental Plan are implemented, consideration must be given to the fact that U.S. plants have in the past moved to Mexico to avoid pollution abatement costs.
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