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The Locational and Functional Behavior of U.S. Autoparts Suppliers

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Ho Kim ()

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Abstract

The free trade agreement with Mexico was expected to help U.S. autoparts suppliers move southward to take advantage of low labor cost, but this has not yet happened. We can find explanations for this rather perplexing phenomenon through analyzing the outcome of a postal survey conducted just before the North American Free Trade Agreement (NAFTA) went into effect. The responses from the suppliers highlight the apparent hierarchy in the lean produc-tion system and its impact on the location choices of the parts-manufacturing firms. Despite advances in transportation and telecommunication technologies, the need to maintain short distance with respect to customers is still the single most important consideration in their decision-making. Given the reluctance on the part of the vehicle assemblers, a mass migration of suppliers to Mexico seems unlikely, although it is true that they are quite attracted to the low wages offered south of the border. Copyright Springer Science + Business Media, Inc. 2005

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File URL: http://hdl.handle.net/10.1007/s11187-005-3099-9
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Publisher Info
Article provided by Springer in its journal Small Business Economics.

Volume (Year): 24 (2005)
Issue (Month): 1 (February)
Pages: 79-95
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Handle: RePEc:kap:sbusec:v:24:y:2005:i:1:p:79-95

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  1. R D Bingham & K K Sunmonu, 1992. "The restructuring of the automobile industry in the USA," Environment and Planning A, Pion Ltd, London, vol. 24(6), pages 833-852, June. [Downloadable!] (restricted)
  2. Ho Yeon Kim, 2003. "Impact of trade liberalization on the location of firms: NAFTA and the automobile industry," The Annals of Regional Science, Springer, vol. 37(1), pages 149-173, 02. [Downloadable!] (restricted)
  3. Markusen, James R. & Rutherford, Thomas F. & Hunter, Linda, 1995. "Trade liberalization in a multinational-dominated industry," Journal of International Economics, Elsevier, vol. 38(1-2), pages 95-117, February. [Downloadable!] (restricted)
  4. Mary Amiti, 1998. "Trade Liberalisation and the Location of Manufacturing Firms," The World Economy, Blackwell Publishing, vol. 21(7), pages 953-962, 09. [Downloadable!] (restricted)
  5. McCann, Philip & Fingleton, Bernard, 1996. "The Regional Agglomeration Impact of Just-in-Time Input Linkages: Evidence from the Scottish Electronics Industry," Scottish Journal of Political Economy, Scottish Economic Society, vol. 43(5), pages 493-518, November.
  6. Gianmarco I. P. Ottaviano & Diego Puga, 1998. "Agglomeration in the Global Economy: A Survey of the 'New Economic Geography'," The World Economy, Blackwell Publishing, vol. 21(6), pages 707-731, 08. [Downloadable!] (restricted)
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  7. Smith Jr. , Donald F. & Florida Richard, 1994. "Agglomeration and Industrial Location: An Econometric Analysis of Japanese-Affiliated Manufacturing Establishments in Automotive-Related Industries," Journal of Urban Economics, Elsevier, vol. 36(1), pages 23-41, July. [Downloadable!] (restricted)
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