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Maquiladora

Maquiladora. Spanish for U.S.-owned and operated assembly factories in Mexico (outsourcing) 11,500 Maquiladoras Tijuana alone has 4,000 Maquiladoras , employing nearly 1 million workers and producing goods whose value-added was over $7 billion a year in 1998. Maquiladora.

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Maquiladora

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  1. Maquiladora • Spanish for U.S.-owned and operated assembly factories in Mexico (outsourcing) • 11,500 Maquiladoras • Tijuana alone has 4,000 Maquiladoras, employing nearly 1 million workers and producing goods whose value-added was over $7 billion a year in 1998.

  2. Maquiladora • Advantage of cheap labor (sweatshops) • 1995 hourly labor costs $7.71 along the US border, and $1.51 in Mexico. • Export of assembled products to the U.S. (export processing zones) • Maquiladoras account for about half of Mexico's almost $150 billion annual exports (textiles and consumer electronics only second to oil in the Mexican economy.) • Import of product components

  3. Spatial distribution of maquiladoras • Close to major cities / points of entry to the U.S. located along the 2,100 mile border with the United States. • Ease of transportation into the U.S. • Mexican government originally insisted that maquiladoras be within 35 mile of the U.S. border

  4. Why hasMexico has emerged as an important location in the global system of industrial organization? Labor factor: • Inexpensive labor costs in Mexico: New/global international division of labor Political Factors: • NAFTA • Mexico's stable government • Weak environmental regulations in Mexico

  5. Economic Factors: • Tax incentives / No Mexican tariffs on imported parts or for exported products • Mexico's stable economy • Mexico's expanding middle class / urbanization / skilled labor • Exploitation of less developed countries / core-periphery model • Rise of transnational corporations • Use of oil as leverage in international market • U.S. shift to a tertiary economy • Tourism as a source of foreign currency

  6. More factors Geographic Factors: • Mexico's proximity to U.S. market Infrastructure: • Transporation connection between U.S. and Mexico • U.S. transportation infrastructure

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