Maquila Industry impacts on the spatial redistribution of employment

Abstract

The Border Industrialization Program (BIP) of 1965 that gave rise to the maquiladora industry offered not only jobs to northern region Mexicans, many of whom had seen their seasonal U.S. jobs in the Bracero Program terminated, but also provided a cheaper source of labor for competitively hard-pressed U.S. manufacturing capital (Gruben 1990 and WEFA-CIEMEX 1988). The latter rationale, of course, is the basis for continuing legislative support until the recent passage of the North American Free Trade Agreement (NAFTA), even as the U.S. rank and file has been distressed about eroding jobs and real wages. The sectoral, factor share and demographic incidence of benefits and losses of the maquiladora program have been of concern for public policy (Sklair 1989, Stoddard 1987 and Wilson 1992); so also is the spatial distribution of BIP impacts. Politicians representing the northern U.S. industrial manufacturing belt states decry the loss of blue collar jobs to Mexico, while chambers of commerce and lobbyists representing U.S. border states cite results from local multiplier impact studies showing positive local job gains (Michie 1987, Mitchell and Vargas 1987, Patrick 1989 and Pavlakovic 1991). The passage of NAFTA will change the pattern of impacts of the maquiladoras. For example, NAFTA reduces protectionist rules, such as the requirement that American owned maquiladoras must purchase inputs only from American suppliers. NAFTA will produce a broader array of economic impacts than did the BIP legislation, but they are similar in one respect. This is in encouraging investment shifts from the U.S. to Mexico to gain lower production costs for goods destined for U.S. markets. To this extent, this study is pertinent to the current NAFTA environment. For this, and to understand historical impacts of the BIP, it is of interest to estimate the spatial impacts of the maquiladora program as it has been implemented. Consequently, this study assesses the relative magnitude of employment gains and losses across U.S. geographic regions due to the BIP.

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