Mexico's Maquiladora Research Articles

Gendered Exploitation under Contemporary Capitalism

Abstract With globalization as a catalyst, hegemonic powers dependent upon neoliberal capitalism continue to exploit resources, locations, and humans for economic benefit. This research explores how states and corporations strategically force already vulnerable populations into further lives of precarity, all to extract surplus value to feed the capitalist machine. Employing World Systems and Decolonial Theory we seek to uncover the paths that corporations take to cut corners, exploit labor, and avoid regulations. Specifically, we will be comparing the evolution of the semiconductor industry in Southeast Asia with the maquiladoras in Mexico to illuminate the methodical exploitation of labor and the earth in the name of economic gain.

The domestic content of Mexico's maquiladora exports: A long-run perspective

ABSTRACTThis paper studies the domestic value-added content of exports by Mexico's maquiladoras (export-processing firms) during the period from 1981 to 2006. We combine a specific input–output table for maquiladora firms with detailed longitudinal data on outputs and inputs. Policy shifts and major currency devaluations (both taking place in 1982 and 1994) drastically altered the foreign sourcing structure of most maquila firms and conditioned their demand for domestic inputs in the years thereafter. A long-run gradual decline in aggregate domestic value added in maquiladora exports is largely accounted for by the falling domestic content within electronics manufacturing.

Organizing for Better Lives

Todd Jailer, Miriam Lara-Meloy, and Maggie Robbins, The Workers' Guide to Health and Safety (Berkely, CA: Hesperian, 2015), 576 pages, $34.95, paperback.The new Workers' Guide to Health and Safety—with drawings on every page—is a fun read, which is an unusual thing to say about a book with such a serious intent. Garrett Brown, an industrial hygienist with decades of experience as an inspector and activist in California, Mexico, and Bangladesh, claimed with some justification that of all the books on occupational health and safety, "almost none…are accessible to workers or their organizations." The Workers' Guide is the first major book aimed at organizing for healthier conditions in the labor-intensive export industries of countries like Bangladesh and China, Mexico's maquiladora frontier, in Central America and Southeast Asia, and even in the United States itself, where for many, working and living conditions are being beaten down.Click here to purchase a PDF version of this article at the Monthly Review website.

Social Responsibility of Multinational Corporations: The Case of Mexico's Maquiladora

Social Responsibility of Multinational Corporations: The Case of Mexico's Maquiladora

Offshore production and business cycle dynamics with heterogeneous firms

To examine the effect of offshoring through vertical FDI on the international transmission of business cycles, I propose a two-country model in which firms endogenously choose the location of their production plants over the business cycle. Firms face a sunk cost to enter the domestic market and an additional fixed cost to produce offshore. As such, the offshoring decision depends on the firm-specific productivity and on fluctuations in the relative cost of effective labor. The model generates a procyclical pattern of offshoring and dynamics along its extensive margin that are consistent with data from Mexico's maquiladora sector. The extensive margin enhances the procyclical response of the value added offshore to expansions in the home economy, as the number of offshoring firms mirrors the dynamics of firm entry at home. As a result, offshoring increases the comovement of output across economies, in line with the empirical evidence.

Main benefits obtained from a successful JIT implementation

Literature has reported 31 benefits obtained by companies after a successful JIT implementation. However, this research reduces the list by means of a data reduction technique to identify those essential benefits that must be pursued. The 31 benefits are integrated in a questionnaire that is administered to 144 production managers in maquiladoras in Mexico to measure the extent to which they are obtained according to respondents. One the one hand, a validation process and descriptive analysis are carried out for every benefit by considering their median values as a measure of central tendency and interquartile range values as a measure of dispersion. On the other hand, data reduction was achieved by means of a factor analysis based on principal components and varimax rotation. Four main factors related to JIT benefits are identified after the factor analysis, which explain 67.27 % of total variance of data. Identified factors concern inventory management, production process, human resources, and economic benefits.

Pollution Risks Accompanied with Economic Integration of ASEAN Countries and the Fragmentation of Production Processes

Economic integration in the Southeast Asian region has been rapidly progressing resulting in an accelerating fragmentation of the production processes. Thai multinational corporations have moved factories over their national borders. Similar fragmentation arose along the US-Mexico border from the 1970s and resulted in serious industrial pollution in Mexico along the national border. This paper examines the risks of pollution accompanied with the fragmentation of the production processes. The current state of industrial areas in Cambodia and Myanmar, along the national border of Thailand, is analyzed in relation to Maquiladoras in Mexico and industrial areas in India. An international environmental agreement, similar to what was agreed upon between Mexico and the US, would seem to be the most effective way to prevent pollution.

The Role of Labor and Transaction Costs in the Success of Manufacturing Offshore: Evidence from Mexico's Maquiladora Industry

The practice of shifting manufacturing activities to lower wage countries has thrived lately as firms attempt to reduce labor and other costs. However, success has been elusive for many of these firms. We investigate the determinants of offshoring success, with emphasis on the role of transaction costs in firms’ decisions to continue (or discontinue) manufacturing abroad. We hypothesize that labor constraints, supply chain frictions, and other transaction costs could impact production and potentially offset labor cost savings. We analyze labor costs and constraints and relevant transaction costs. We find that although successful plants pay a wage premium and more benefits to workers, their overall labor costs are relatively lower. These plants attract a more skilled and stable labor force, outsource non-manufacturing functions more often, and use fewer Mexican suppliers. Overall, our findings suggest that environmental frictions and transaction costs matter when shifting production offshore.

Cross-border production sharing and exchange-rate sensitivity of Mexico's trade balance

Increasing patterns of international trade occur in the form of cross-border production sharing – the dispersion of separate blocks of an integrated production process across different nations. In the case of ‘standard’ or ‘ordinary’ trade, imports are destined for use in the importing country, and exports are largely produced within the country. However, with production sharing, imported parts and components are destined for inclusion in the country's exports. A depreciation of a nation's currency raises its exports. At the same time, imported components become more expensive, which partly offsets the expansionary effect of the depreciation on exports. Using a simple theoretical framework, this paper shows that production networks lower the sensitivity of a country's trade balance to changes in exchange rates. The empirical examination finds Mexico's Maquiladora trade balance to be unresponsive to changes in both, its real effective as well as its real peso-dollar rates, while that for non-Maquiladora category is significantly responsive, in confirmation with the theorized hypothesis.

A Study on Supply Chain Governance Structure in Mexico's Maquiladora Industry

라틴 아메리카 지역에 진출한 다국적 기업은 거래하고 있는 지역 납품업체와 같은 현지 기업의 발전에 영향을 미칠 수 있다. 본 연구에서는 멕시코의 수출 자유 지역(export processing zone)에 있는 마킬라(maquila) 공장과 마킬라 공장과 거래하고 있는 지역 멕시칸 납품업체들로 이루어진 공급 사슬(supply chain)의 지배 구조(governance structure) 특성을 연구하였다. 미국과 멕시코의 동부 국경 지역에 있는 멕시코 타마울리파스(Tamaulipas) 주(州)의 산업 도시인 레이노사(Reynosa) 시(市) 주변에 위치하고 있는 25개의 마킬라 공장들과 지역 멕시칸 납품업체들의 관리자(manager)들을 인터뷰한 결과, 마킬라 공장들과 지역 멕시칸 납품업체들 사이에 가장 강하게 나타나는 지배 구조 유형은 네트워크 지배 구조였다. 하지만, 네트워크 지배 구조의 세부적 유형 중에서 신뢰를 바탕으로 상호 의존도가 높고 자산 특유한 투자(asset-specific investment)의 정도가 높은 관계적 지배 구조 유형이 마킬라 공장과 지역 멕시칸 납품업체 모두에게 가장 높은 빈도로 나타나지 않았다. 이러한 결과는 마킬라 공장과 지역멕시칸 납품업체간의 네트워크 지배 구조에 어떤 제약들이 존재하고 있음을 나타낸다고 할수 있다. 추가적으로 본 연구에서는 관련된 문헌들을 중심으로 그러한 제약들이 무엇인지 탐색한다. 또한, 주로 지속적인 미국 경제의 침체와 저생산비용의 경쟁적 수출 자유 지역으로서 중국의 등장으로 인해 최근에 마킬라도라 산업이 정체된 성장률을 보이고 있는 데, 이의 극복을 위한 마킬라도라 산업의 대안적인 발전 모델에 대하여 마킬라 공장과 지역 멕시칸 납품업 체간의 지배 구조에 관한 함의도 살펴본다.

Fairness and Wages in Mexico's Maquiladora Industry: An Empirical Analysis of Labor Demand and the Gender Wage Gap

In 2001, China's entry into the World Trade Organization (WTO) and the US recession put pressure on maquiladora workers' wages. The result was an increase in the gender wage gap. At the firm level, this increase is not discriminatory, in the sense that the lower income entitlement for women is socially accepted at the household level. This paper uses Akerlof and Yellen's (1990) fair wage–effort hypothesis to explain the gender wage gap as a matter of “fair-wage constraints” that differ across genders, which are, in turn, due to evolving social norms of fairness in reservation wages for men and women within households. Empirical evidence for changes in gender wages gaps across industries between 1997 and 2006 is found to be consistent with this argument.

An Update On Budgetary Participation, Locus Of Control, And The Effects On Mexican Managerial Performance And Job Satisfaction

This study examines the effects of budgetary participation, and the personality variable, locus of control, on the performance and job satisfaction of Mexican managers working for US controlled maquiladoras on the US/Mexican border and within interior Mexico. This study follows the methodology employed by Frucot and Shearon (1991), finds similar empirical results, but reaches quite different interpretations and conclusions. While Frucot and Shearon interpreted their results as suggesting caution in the use of participative budgeting by US companies operating in Mexico, we find that Mexican managers working for US controlled maquiladoras in Mexico may exhibit cultural values much like their US counterparts and that the performance of these Mexican managers may benefit from budgetary participation.

Offshoring and Volatility: More Evidence from Mexico's Maquiladora Industry

In recent papers, Bergin, Feenstra, and Hanson (2007 and 2009, hereafter BFH) analyze the impact that offshoring has in employment and output volatility, particularly on the Mexican maquiladora industry. Their empirical results indicate that employment and output in the offshoring manufacturing plants in Mexico are more volatile than their counterparts in the U.S. Such empirical results suggest that the maquiladora industry (offshoring) can help the U.S. industrial sector to better absorb shocks. In this paper, I expand BFH's empirical analysis in different directions. The empirical results I provide here suggest that the volatility in employment and output in Mexico's maquiladoras is greater than the one estimated by BFH. Therefore, offshoring via the maquiladora industry in Mexico can act as a greater cushion for business cycle fluctuations in the U.S.

Offshore Production and Business Cycle Dynamics with Heterogeneous Firms

Cross-country variation in production costs encourages the relocation of production facilities to other countries, a process known as offshoring through vertical foreign direct investment. I examine the effect of offshoring on the international transmission of business cycles. Unlike the existing macroeconomic literature, I distinguish between fluctuations in the number of offshoring firms (the extensive margin) and in the value added per offshoring firm (the intensive margin) as separate transmission mechanisms. The firms' decision to produce offshore depends on the firm-specific level of labor productivity, on fluctuations in the relative cost of effective labor, and on the fixed and trade costs of offshoring. The model replicates the procyclical pattern of offshoring and the dynamics along its two margins, which I document using data from U.S. manufacturing and Mexico's maquiladora sectors. Offshoring enhances the synchronization of business cycles, and dampens the real exchange rate appreciation generated by aggregate productivity differentials across countries.

Reforma estructural en la integración de la industria maquiladora a la economía mexicana

Se examina la literatura e información estadística reciente en torno al desempeño macroeconómico de la industria maquiladora en México, y se determina su contribución actual a la balanza de pagos, empleo, remuneraciones, valor agregado y al crecimiento económico. La aportación de esa actividad al crecimiento económico es ahora reducida, pero puede ser más significativa si se modifican sus parámetros estructurales y de la economía: la propensión de la industria maquiladora a importar insumos (recíproca a la suma del componente de insumos nacionales y la aportación al valor agregado), el componente importado de la formación bruta de capital, la propensión media a importar del resto de actividades y la estructura de la distribución del ingreso. Se esbozan las políticas que podrían diseñarse y aplicarse para mejorar la articulación de ese sector con el resto de las actividades productivas.

Offshoring and Volatility: Evidence from Mexico's Maquiladora Industry

This paper studies the second-moment properties of offshoring, the arrangement whereby firms carry out particular stages of production abroad. It documents a new empirical regularity: maquiladora industries in Mexico that are associated with US offshoring experience fluctuations in employment that are twice as volatile as the corresponding industries in the United States. This finding is not attributable simply to higher volatility in the overall Mexican economy, nor to the smaller size of Mexico's industries compared to US counterparts. (JEL F14, F23, L24, L25, L60, O14)

Mexico's Maquiladora Program

This case is intended to introduce students to Mexico's maquiladora (sometimes called in-bond) program and its role in Mexico's use of its border with the United States as a key part of its national development strategy. The evolution and operation of the maquiladora program are described, data on its effects on Mexico's macroeconomic and social performance (employment, foreign exchange, living standards) are provided, and the points of view of various stakeholders (in Mexico and the United States) are examined.

Globalization and population drivers of rural-urban land-use change in Chihuahua, Mexico

A thorough examination of the causes of land-use change is necessary to effectively deal with the magnitude of changes across the globe. Chihuahua, Mexico is experiencing rapid land-use changes due to processes of globalization. The emergence of Mexico's maquiladora program is an indicator of economic globalization that has had far-reaching social and environmental consequences. This article examines population and income patterns from 1970 to 2000 as part of a hierarchical system and tests whether or not processes of globalization can be detected in the patterns. Findings indicate that population and income concentrate primarily in Juarez, while simultaneously deconcentrating in most other municipios of the State. Moreover, these patterns correlate with patterns of maquiladora concentration. Additional findings identify proximity to the US and established urban centers as drivers of population concentration. These findings support the notion that patterns and processes of globalization are important drivers of population and income concentration at the local level in Chihuahua, Mexico. Finally, the findings support the conceptualization of population land-use and income concentration as part of a hierarchical system.

Knowledge and Opinions of Emergency Contraceptive Pills Among Female Factory Workers in Tijuana, Mexico

Workers in Mexico's maquiladoras (assembly plants) are mainly young, single women, many of whom could benefit from emergency contraceptive pills (ECPs). Because ECPs are readily available in Mexico, women who know about the therapy can obtain it easily. Do maquiladora workers know about the method? Could worksite programs help increase awareness? To investigate these questions, we conducted a five-month intervention during which workers in three maquiladoras along the Mexico-United States border could attend educational talks on ECPs, receive pamphlets, and obtain kits containing EC supplies. Among the workers exposed to our intervention, knowledge of ECPs increased. Reported ECP use also increased. Although our intervention apparently increased workers' knowledge and use, the factory proved to be a difficult intervention setting. Problems we experienced included a factory closure and management/staff opposition to certain project elements. Future studies should continue to investigate work-site interventions and other strategies to reach workers.

The Quality of Maquiladora Investment in a Post China/WTO World: A Literature Review and Case Studies from Reynosa

ABSTRACT Studies have consistently shown that exports manufactured in China have taken a significant market share away from Mexican producers in the United States (US) import market. In this paper, we examine how this change is shaping the quality of foreign direct investment (FDI) in Mexico's maquiladora industry. Various thought leaders have suggested that low wage Chinese competition will force maquilas of out labor intensive sectors and will make them lean towards higher value added, technology intensive activities. An alternative perspective has been provided by those who argue that Mexico's unique comparative advantage is its geographic proximity to the US, and that there is no reason to believe proximity dependent maquilas will fit into a high-tech, high value added model. To determine which of these scenarios is more accurate, we summarize relevant literature and provide case studies drawn from five startup plants located in the only major Mexican city that has seen maquila employment gains over the 2000-2006 period. Research suggests that maquilas are leaning towards proximity dependent, and not necessarily technology intensive business models. The case studies illustrate a number of long term characteristics of the maquiladora environment that may limit upgrading. We conclude with policy recommendations as well as suggestions for future research. RESUMEN. Los estudios realizados mostraron consistentemente que las exportaciones de manufacturados provenientes de China han ganado una porción significativa del mercado de importación en los Estados Unidos, que solía estar en las manos de los productores mexicanos. En este estudio examinamos cómo este cambio está modelando la calidad de la inversión extranjera directa (FDI) en la industria maquiladora mexicana. Varios líderes de la industria han expresado que la competencia resultante de los bajos salarios chinos forzará a las maquiladoras a salir de los sectores con intensiva mano de obra, para desplazarse hacia otros de mayor valor agregado, y otras actividades vinculadas profundamente a la tecnología. Una perspectiva alternativa ha sido suministrada por aquellos que sostienen que la singular ventaja competitiva mexicana reside en su proximidad geográfica a los EE.UU., y no existe razón alguna para pensar que las maquilas que dependen de esta proximidad se encajarán correctamente en este modelo altamente tecnológico, de alto valor agregado. Con el propósito de determinar cual de estos escenarios es el más correcto, hemos resumido la literatura importante y suministrado estudios de caso extraídos de cinco plantas puestas en marcha, situadas en una de las más importantes ciudades mexicanas, cuyos índices de empleo provenientes de maquiladoras han aumentado durante el período 2000-2006. Las investigaciones sugieren que las maquilas están evolucionando hacia modelos comerciales que dependen de la proximidad geográfica, y no necesariamente intensivos en tecnología. Los estudios de caso ilustran un número de características del entorno de las maquiladoras a largo plazo, que pueden limitar su actualización. Hemos concluido emitiendo una política de recomendaciones, así como sugerencias para futuras investigaciones. RESUMO. Estudos mostram, consistentemente, que as exportações manufaturadas da China abocanharam uma fatia significativa do mercado dos produtores mexicanos no mercado de importação americano. Neste trabalho, examinamos como tal mudança está determinando a qualidade do investimento direto estrangeiro (FDI) na indústria maquiladora do México. Diversos líderes pensadores afirmaram que a competição chinesa, através de baixos salários, forçará as maquilas a deixar setores de mão-de-obra intensa e crescer em busca de um maior valor adicional, as atividades de alta tecnologia. A partir de uma perspectiva alternativa, outros defendem que a única vantagem comparativa mexicana é a proximidade com os Estados Unidos, e não há razão para acreditar que as maquilas dependentes desta proximidade adaptar-se-ão ao modelo de maior valor adicional e de alta tecnologia. Para comprovar a precisão destes cenários, resumimos o que há de relevante na literatura e apresentamos estudos de casos baseados em cinco fábricas inauguradas, na única grande cidade mexicana, que presenciou o aumento de emprego das maquilas no período de 2000 a 2006. Pesquisas sugerem que as maquilas estão tornando-se dependentes da proximidade e, não necessariamente, da alta tecnologia e dos modelos de negócios. Os estudos de caso registram uma série de características arraigadas do ambiente da maquiladora, que pode limitar o seu crescimento. Concluímos com recomendações políticas e com sugestões para pesquisas futuras.