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The Impact of the Maquiladora Industry on U.S. Border Cities

Author

Listed:
  • Jesús Cañas
  • Roberto Coronado
  • Robert W. Gilmer
  • Eduardo Saucedo

Abstract

For decades, the maquiladora industry has been a major economic engine along the U.S.–Mexico border. Since the 1970s, researchers have analyzed how the maquiladora industry affects cities along both sides of the border. Gordon Hanson (2001) produced the first comprehensive study on the impact of the maquiladoras on U.S. border cities, considering the impact of these in-bond plants on both employment and wages. His estimates became useful rules of thumb for the entire U.S.–Mexico border. These estimates have become dated, as Hanson's study covered the period from 1975 to 1997. The purpose of this paper is to update Hanson's results using data from 1990 to 2006 and to extend the estimates to specific border cities. For the border region as a whole, we find that the impact of a 10 percent increase in maquiladora production leads to a 0.5 to 0.9 percent change in employment. However, we also find that the border average is quite misleading, with large differences among individual border cities. Cities along the Texas–Mexico border benefit the most from growing maquiladora production. We also estimate the cross-border maquiladora impacts before and after 2001 when border security begins to rise, the maquiladora industry entered a severe recession and extensive restructuring and global low-wage competition intensified as China joined the World Trade Organization. Empirical results indicate that U.S. border cities are less responsive to growth in maquiladora production from 2001 to 2006 than in the earlier period; however, when looking into specific sectors we find that U.S. border city employment in service sectors are far more responsive post-2001.
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Suggested Citation

  • Jesús Cañas & Roberto Coronado & Robert W. Gilmer & Eduardo Saucedo, 2013. "The Impact of the Maquiladora Industry on U.S. Border Cities," Growth and Change, Wiley Blackwell, vol. 44(3), pages 415-442, September.
  • Handle: RePEc:bla:growch:v:44:y:2013:i:3:p:415-442
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    References listed on IDEAS

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    1. Robert W. Gilmer & Matthew Gurch & Thomas Wang, 2001. "Texas border cities : an income growth perspective," Monograph, Federal Reserve Bank of Dallas, number 2001tbcaig.
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    Cited by:

    1. Hiroyuki Taguchi & Nattawoot Tripetch, 2014. "The "Maquila" Lessons and Implications to Thai-Myanmar Border Development," International Journal of Asian Social Science, Asian Economic and Social Society, vol. 4(3), pages 392-406, March.
    2. Taguchi, Hiroyuki & Nozaki, Kenji, 2014. "Regional connectivity in continental ASEAN," MPRA Paper 64410, University Library of Munich, Germany.
    3. Pedro Niño & Roberto Coronado & Thomas Fullerton & Adam Walke, 2015. "Cross-border homicide impacts on economic activity in El Paso," Empirical Economics, Springer, vol. 49(4), pages 1543-1559, December.

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