Maquiladoras: Manufacturing Poverty in Mexico

The trend toward a more globalized market has become increasingly developed in the latter half of the 20th century. Emphasis on world trade has become a dominant figure in almost every Nation’s economy. Between 1970 and 2000 world trade has experienced an increase of almost 370 percent. Concurrently, world GDP increased by 150 percent. Trade is beneficial to Nations because it allows the creation of avenues that aid in efficient allocation of resources (Canas & Coronado). Countries can gain from trade when they specialize according to their comparative advantage. This is, when they create conditions where goods and services can be produced at a lower opportunity cost than in any other country. Along the same logic, countries can also make large profits by taking advantage of another countries comparative advantage.

A prime example of this is the relationship between Mexico and the United States. Mexico has a comparative advantage over a large majority of countries in the world in its abundance of cheap labor. Mexico also has fairly underdeveloped environmental protection and labor laws, which allows corporations more leeway in their operations. Additionally, Mexico provides incentives to foreign corporations including reduced tariffs, unrestricted leases and certain tax exemptions. As a result, corporations have less overhead costs and a greater potential for profits.

In this paper I will discuss this phenomenon in several different contexts. First, I will draw on the history of Mexican labor in the United States as it undoubtedly set the stage for future labor agreements between these two nations. Second, I will discuss the Maquiladora Program which encouraged United States corporations to relocate their pl...

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