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Was NAFTA behind Mexico's high maquiladora growth?

  • William C. Gruben
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    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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    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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    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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