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The Development of the Maquiladora Industry in Mexico and its Regional Impact

The Development of the Maquiladora Industry in Mexico and its Regional Impact

Over its more than fifty-year history the development of the maquiladora industry in Mexico has constituted one of the country’s most dynamic and valuable economic sectors.

The development of the maquiladora industry in Mexico occupies a very important place in the structure of the country’s economy.  Considered as a sector, it contributes to most of Mexico’s non-oil exports and represents a pole of growth and dynamism of the nation’s non-financial sector.  Mexico’s economic growth as a whole is closely linked to its continued expansion and development.

Although the development of the maquiladora industry in Mexico began in the mid-1960s, it wasn’t until the opening of trade in the 1980s, and the signing of the NAFTA in 1994, that the Mexican government viewed the industry as the principal means by which the country would insert itself into the global economy.  The nation’s leaders also began to recognize that the development of the maquiladora industry in Mexico was critical to the modernization of the country’s productive base at this time.

In recent times, coinciding with the United States’ changing stance on trade under the Trump administration, some have begun to question the development of the maquiladora industry in Mexico as the country’s main mechanism of economic growth.  Those that hold a positive perspective see the development of the maquiladora industry in Mexico as a stepping stone to Manufacturing 4.0.  On the other hand, those holding the alternate point of view see the sector’s continued growth as an exacerbation of Mexico’s dependence upon the economy of the United States.

The development of the maquiladora industry in Mexico is a driver of job growth

In a national context, the development of the maquiladora industry in Mexico has been an important source of the nation’s employment for more than fifty years.  The industry was created and promoted to absorb the supply of labor that was idled by the cessation of what was known as the Bracero Program.  Since its inception, the development of the maquiladora industry in Mexico has been steady.  In 1965, there were twelve manufacturing plants employing 3,107 workers and in 1970 there were already 120.  At this time, they employed more than 20,000 individuals.  Ten years later, in 1980, 120 plants operated in the sector that provided 119,500 jobs.  In 1990, these figures tripled.   By the early 2000s, the development of the maquiladora industry in Mexico encompassed 3,560 establishments and created 1.2 million jobs.   Also, it should be remembered that in 2007 Mexico consolidated its export promotion programs to create IMMEX.  By 2013, there were 5,095 plants that employed a little less than 2.1 million people.  At that time, 50% of the formal sector jobs that were reported to the country’s Social Security Institute (IMMS) were a result of the development of the maquiladora industry in Mexico.

Since the creation of the export maquiladora industry more than 50 years ago, the greatest benefit that has been registered at a regional level is its contribution to formal, permanent employment in the border states, as well as in the country’s interior.  In states such as Chihuahua, Baja California, Tamaulipas, Coahuila and Sonora (the states of the northern border) IMMEX program registered companies employ more than 73% of all individuals occupied in manufacturing.   In this regard, the states of Baja California and Chihuahua stand out.  Because of the development of the maquiladora industry in Mexico, the percentage of manufacturing sector employees that labor in IMMEX registered companies has risen to 80% and 82% respectively.    It is not an exaggeration to say that the economic development of states along the country’s border is closely linked to the continued growth and development of the maquiladora industry in Mexico.

Although the maquiladora industry may have its detractors, at the national level its contribution to regional economies is indisputable.  As a result of the development of the maquiladora industry in Mexico, companies contribute to the establishment and administration of many projects that are linked to social responsibility and sustainability.

One of the challenges that are related to the development of the maquiladora industry in Mexico is to grow a base of quality domestic suppliers in order to fully integrate the sector into the country’s national economy.  Currently, Mexico does not have a large number of homegrown firms that meet the standards of world-class suppliers.  Most of the equipment and raw materials that are used in the maquiladora industry in Mexico are imported from the US and other countries.  Another challenge that the government of Mexico faces is to keep track of regional and national statistics related to the development of the maquiladora industry in Mexico.  There is little formally documented information about the quality of jobs that the sector has created.  Additionally, research must be undertaken in order to determine the maquiladora sector’s contribution to public and national public coffers.  Finally, an effort must be made to determine how the development of the maquiladora industry has affected the overall socio-economic development of Mexican society.

 

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