Professor David Cohen
1 February 2014
An Analysis of the Export Processing Zone of Northern Mexico: Maquiladoras
Although the Mexican maquiladora system is an important component of Mexico-US trade, the connection between the acceleration in maquiladora growth and the North American Free Trade Agreement (NAFTA) needs clarifications. Manufacturing in Mexico obligates American firms to comply with Mexico's detailed labor regulations; however, increasing foreign investment requires that the Mexican Government attempt to make these regulations flexible enough not to scare off foreign investors. Consequently, as much as NAFTA may have increased economic benefits to the Mexican economy, the maquiladora development could be held accountable for the evident poor labour conditions in Mexico as they have increased Mexican industrial productivity to foreign countries without increasing wages (Villarreal 2010).
The Maquiladora is an area of Mexico that extends along the United States and Mexican border for a vital purpose. The role that the maquiladoras play in the development of a country can be discussed through evaluation of a thriving international capitalism occurring in Mexico's northern boundary. The word, maquiladora, is used to describe the foreign-owned assembly plants clustered along the border of Mexico and United States. The maquiladora program was first initiated in 1965, a year after the eligibility of Mexican agricultural workers to legally work in the United States through the Bracero program was terminated (Hanson 2003). After this, Mexican border towns such as Tijuana and Juarez became overcrowded with citizens in temporary settlement to find opportunities of returning to the United States. Subsequently, shortages of food, water, shelter and transportation caused the Mexican government to create the National Border Development Program (PRONAF) in 1965 (Gruben 2011). PRONAF was the first step to establishing the maquiladora sector of Northern Mexico. It was implied as a win-win situation that would improve Mexican economy from foreign investment as well as create jobs for those living in the overcrowded border towns. Regions like the maquiladora are referred to as Export Processing Zones (EPZ), which are big industrial estates set up with multinationals in mind (Salzinger 2003). In this case, government bureaucrats from foreign countries would go to major world cities to offer significantly cheaper costs for labor towards production and manufacturing of goods for export. There's an extensive amount of foreign-owned assembly plants in the maquiladoras. National Auto Parts and Delphi Auto parts are amongst the major automobile industry companies controlled by the major automotive manufacturers like General Motors and Chevrolet. The electronics sector of the maquiladoras is also shared by major manufactures such as Sony, Samsung and Dell (Pais 2011). Currently, Mexico is the second largest supplier of electronic products to the U.S. market. In 2010, Mexico's exported amount of consumer electronics and devices to the United States reached $71.4 US dollars (Pais 2011). A study on maquiladora employment shows that the biggest industry sector is electronics, followed by auto parts in second and apparel at third (Sargent et 2008)(1070). This production line inside Mexico could only occur because of the division of labor in other countries, particularly the United States that had sophisticated factories that would create these cheap assembling activities inside Mexico.
The Mexican government's thriving economy was allegedly reported to experience a halt due to the oil crises of early 1980s (Stracke 2003). In an effort to regenerate its economy, restrictions on the maquiladoras were gradually dropped until the 1989 Maquiladora Decree, the reasonable cause of a dreadful Mexico. The maquiladora Decree's major effects were minimizing income and property taxes that multinationals owed...
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