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Was NAFTA behind Mexico's high maquiladora growth?

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  • William C. Gruben

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.

Suggested Citation

  • William C. Gruben, 2001. "Was NAFTA behind Mexico's high maquiladora growth?," Economic and Financial Policy Review, Federal Reserve Bank of Dallas, issue Q III, pages 11-21.
    • Handle: RePEc:fip:fedder:y:2001:i:qiii:p:11-21
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    References listed on IDEAS

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    1. William C. Gruben, 1989. "Do maquiladoras take American jobs? Some tentative econometric results," Working Papers 8913, Federal Reserve Bank of Dallas.
    2. LILA J. Truett & DALE B. Truett, 1993. "Maquiladora Response To U.S. And Asian Relative Wage Rate Changes," Contemporary Economic Policy, Western Economic Association International, vol. 11(1), pages 18-28, January.
    3. 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. Ruth Banomyong, 2010. "Supply Chain Dynamics in Asia," Working Papers id:3028, eSocialSciences.
    2. Amador, João & Cabral, Sónia, 2014. "Global value chains: surveying drivers and measures," Working Paper Series 1739, European Central Bank.
    3. Hazarika, Gautam & Otero, Rafael, 2008. "North-South Trade Liberalization and Returns to Skill in the South: The Case of Mexico," IZA Discussion Papers 3788, Institute of Labor Economics (IZA).
    4. 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.
    5. Kurt LOESS & Van V. MILLER & David YOSKOWITZ, 2008. "Offshore employment practices: An empirical analysis of routines, wages and labour turnover," International Labour Review, International Labour Organization, vol. 147(2-3), pages 249-273, June.
    6. Julio Huato, 2005. "Maquiladoras and Standard of Living in Mexico Before and After NAFTA," Development and Comp Systems 0508006, University Library of Munich, Germany.
    7. Jessica E. Mullan & Martin F. Kenney & Rafiq Dossani, 2008. "Mexico and the Globalization of Services: Outflanked Once Again?," Economía Mexicana NUEVA ÉPOCA, CIDE, División de Economía, vol. 0(2), pages 171-202, July-Dece.
    8. Keith Phillips & Jesus Cañas, 2008. "Regional business cycle integration along the US–Mexico border," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 42(1), pages 153-168, March.
    9. 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.
    10. 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.
    11. Zlate, Andrei, 2016. "Offshore production and business cycle dynamics with heterogeneous firms," Journal of International Economics, Elsevier, vol. 100(C), pages 34-49.
    12. Lila J. Truett & Dale B. Truett, 2007. "Nafta And The Maquiladoras: Boon Or Bane?," Contemporary Economic Policy, Western Economic Association International, vol. 25(3), pages 374-386, July.
    13. Berndt Christian, 2004. "Regionalentwicklung im Kontext globalisierter Produktionssysteme?," ZFW – Advances in Economic Geography, De Gruyter, vol. 48(1), pages 81-97, October.
    14. Fullerton, T.M., 2007. "Empirical Evidence Regarding 9/11 Impacts on the Borderplex Economy," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 7(2), pages 51-64.
    15. repec:hal:journl:dumas-00910194 is not listed on IDEAS
    16. 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.
    17. João Amador & Sónia Cabral, 2014. "Global Value Chains: Surveying Drivers, Measures and Impacts," Working Papers w201403, Banco de Portugal, Economics and Research Department.
    18. 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.
    19. Ruth Banomyong, 2010. "Supply Chain Dynamics in Asia," Trade Working Papers 22879, East Asian Bureau of Economic Research.

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