Openness and Industrial Response in a Wal-Mart World: A Case Study of Mexican Soaps, Detergents and Surfactant Producers
Abstract
This paper uses a case study approach to explore the effects of NAFTA and GATT membership on innovation and trade in the Mexican soaps, detergents and surfactants (SDS) industry. Several basic findings emerge. First, the most fundamental effect of NAFTA and the GATT on the SDS industry was to help induce Wal-Mart to enter Mexico. Once there, Walmex fundamentally changed the retail sector, forcing SDS firms to cut their profit margins and/or innovate. Those unable to respond to this new environment tended to lose market share and, in some cases, disappear altogether. Second, partly in response to Walmex, many Mexican producers logged impressive efficiency gains during the previous decade. These gains came both from labour-shedding and from innovation, which in turn was fuelled by innovative input suppliers and by multinationals bringing new products and processes from their headquarters to Mexico. Finally, although Mexican detergent exports captured an increasing share of the US detergent market over the past decade, Mexican sales in the US were inhibited by a combination of excessive shipping delays at the border and artificially high input prices (due to Mexican protection of domestic caustic soda suppliers). They were also held back by the major re-tooling costs that Mexican producers would have had to incur in order to establish brand recognition among non-Latin consumers, and in order to comply with zero phosphate laws in many regions of the US. Copyright 2008 The Authors. Journal compilation 2008 Blackwell Publishing Ltd.Download Info
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Bibliographic Info
Article provided by Wiley Blackwell in its journal World Economy.
Volume (Year): 31 (2008)
Issue (Month): 12 (December)
Pages: 1558-1580
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Related research
Keywords:Other versions of this item:
- Keller, Wolfgang & Smarzynska Javorcik, Beata & Tybout, James R, 2006. "Openness and Industrial Response in a Wal-Mart World: A Case Study of Mexican Soaps, Detergents and Surfactant Producers," CEPR Discussion Papers 5823, C.E.P.R. Discussion Papers.
- Beata Smarzynska Javorcik & Wolfgang Keller & James R. Tybout, 2006. "Openness and Industrial Responses in a Wal-Mart World: A Case Study of Mexican Soaps, Detergents and Surfactant Producers," NBER Working Papers 12457, National Bureau of Economic Research, Inc.
- Javorcik, Beata & Keller, Wolfgang & Tybout, James, 2006. "Openness and industrial response in a Wal-Mart world : a case study of Mexican soaps, detergents, and surfactant producers," Policy Research Working Paper Series 3999, The World Bank.
- F1 - International Economics - - Trade
- F2 - International Economics - - International Factor Movements and International Business
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
- L6 - Industrial Organization - - Industry Studies: Manufacturing
References
References listed on IDEASPlease report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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Citations
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
- Raff, Horst & Schmitt, Nicolas, 2009.
"Buyer power in international markets,"
Journal of International Economics,
Elsevier, vol. 79(2), pages 222-229, November.
- Horst Raff & Nicolas Schmitt, 2008. "Buyer Power in International Markets," Kiel Working Papers 1431, Kiel Institute for the World Economy.
- Horst Raff & Nicolas Schmitt, 2009. "Buyer Power in International Markets," CESifo Working Paper Series 2755, CESifo Group Munich.
- Horst Raff & Nicolas Schmitt, 2007. "Buyer Power in International Markets," Discussion Papers dp07-23, Department of Economics, Simon Fraser University.
- Arnold, Jens M. & Javorcik, Beata S. & Mattoo, Aaditya, 2011.
"Does services liberalization benefit manufacturing firms?: Evidence from the Czech Republic,"
Journal of International Economics,
Elsevier, vol. 85(1), pages 136-146, September.
- Arnold, Jens & Javorcik, Beata S. & Mattoo, Aaditya, 2007. "Does services liberalization benefit manufacturing firms ? Evidence from the Czech Republic," Policy Research Working Paper Series 4109, The World Bank.
- Eleni A Kaditi, 2011. "Market Dynamics in Supply Chains: The Impact of Globalisation and Consolidation on Food Companie's Mark-ups," Working Papers id:4430, eSocialSciences.
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"The role of importers and exporters in the determination of the U.S. tariff preferences granted to Latin America,"
Journal of Development Economics,
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- Silva, Peri, 2005. "The role of importers and exporters in the determination of the U.S. tariff preferenes granted to Latin America," Policy Research Working Paper Series 3518, The World Bank.
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CESifo Working Paper Series
2817, CESifo Group Munich.
- Horst Raff & Nicolas Schmitt, 2009. "Imports, Pass-Through, and the Structure of Retail Markets," Kiel Working Papers 1556, Kiel Institute for the World Economy.
- Emek Basker, 2007.
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Journal of Economic Perspectives,
American Economic Association, vol. 21(3), pages 177-198, Summer.
- Emek Basker, 2006. "The Causes and Consequences of Wal-Mart's Growth," Working Papers 0611, Department of Economics, University of Missouri.
- Cédric Durand, 2009. "Wal-Mart en México, una trajectoria exitosa y sus causas," Post-Print hal-00522525, HAL.
- Kaditi, Eleni A., 2011. "Market Dynamics in Supply Chains: The Impact of Globalisation and Consolidation on Food Companies' Mark-Ups," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114452, European Association of Agricultural Economists.
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