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Was NAFTA behind Mexico's high maquiladora growth?

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  • William C. Gruben
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    Abstract

    Although Mexico's maquiladora system is an important and well-recognized component of Mexico-U.S. trade, the connection between the acceleration in maquiladora growth and NAFTA is less clearly understood. A broad cross section of observers -- including journalists, political activists, industry analysts, and academics -- argue that Mexico's maquiladoras have been strongly influenced by NAFTA and have grown rapidly as a result. William C. Gruben finds no such connection when he tests for NAFTA's contribution to fluctuations in maquiladora employment. Instead, he finds that maquiladoras' post-NAFTA growth is connected to changes in Mexican wages relative to those in Asia and the United States and to fluctuations in U.S. industrial production. For every 1 percent change in U.S. industrial production , maquiladora employment changes between 1.2 percent and 1.3 percent. This connection is consistent with declining maquiladora employment in 2001, as U.S. industrial production has fallen, but is not consistent with the contention that NAFTA was responsible for Mexico's high maquiladora growth.

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    File URL: http://www.dallasfed.org/assets/documents/research/efr/2001/efr0103b.pdf
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    Bibliographic Info

    Article provided by Federal Reserve Bank of Dallas in its journal Economic and Financial Policy Review.

    Volume (Year): (2001)
    Issue (Month): Q III ()
    Pages: 11-21

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    Handle: RePEc:fip:fedder:y:2001:i:qiii:p:11-21

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    Keywords: North American Free Trade Agreement ; Mexico ; Maquiladora;

    References

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    1. David M. Gould, 1998. "Has NAFTA changed North American trade?," Economic and Financial Policy Review, Federal Reserve Bank of Dallas, issue Q 1, pages 12-23.
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    Cited by:
    1. Mollick, Andre Varella & Wvalle-Vazquez, Karina, 2006. "Chinese competition and its effects on Mexican maquiladoras," Journal of Comparative Economics, Elsevier, vol. 34(1), pages 130-145, March.
    2. Thomas M. Fullerton, Jr. & Juan Carlos Vázquez Morales & Martha Patricia Barraza de Anda, 2011. "Dinamica de corto plazo del empleo en las maquiladoras de Reynosa, Tamaulipas," Ensayos Revista de Economia, Universidad Autonoma de Nuevo Leon, Facultad de Economia, vol. 0(1), pages 23-40, May.
    3. Utar, Hale & Ruiz, Luis B. Torres, 2013. "International competition and industrial evolution: Evidence from the impact of Chinese competition on Mexican maquiladoras," Journal of Development Economics, Elsevier, vol. 105(C), pages 267-287.
    4. Myriam Alejandra Gómez Cárdenas, 2013. "Volatility in the Mexican offshoring industry," Post-Print dumas-00910194, HAL.
    5. Julio Huato, 2005. "Maquiladoras and Standard of Living in Mexico Before and After NAFTA," Development and Comp Systems 0508006, EconWPA.
    6. Mollick, André Varella, 2009. "Employment Responses of Skilled and Unskilled Workers at Mexican Maquiladoras: The Effects of External Factors," World Development, Elsevier, vol. 37(7), pages 1285-1296, July.
    7. Sargent, John & Matthews, Linda, 2004. "What Happens When Relative Costs Increase in Export Processing Zones? Technology, Regional Production Networks, and Mexico's Maquiladoras," World Development, Elsevier, vol. 32(12), pages 2015-2030, December.

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