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Capital Intensity, Technology Intensity, and Skill Development in Post China/WTO Maquiladoras

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  • Sargent, John
  • Matthews, Linda

Abstract

Summary This study examines how rapidly rising exports from China to the United States is shaping the evolution of Mexico's export processing zone (EPZ) industry. Mexican policy makers frequently state that Chinese competition is forcing maquiladoras to exit low-tech, labor intensive industries and evolve toward higher value added, technology intensive sectors. In this study we determine if post China/WTO maquiladoras conform to the predictions of the Mexican government. To do this we collected information through top management interviews and plant tours at 36 startup, rapidly expanding, and premier EPZ producers in Reynosa, Guadalajara, and Monterrey. We find that sample firms have uniformly adopted proximity dependent strategies. The capital intensity, technology intensity, and skill development activities of proximity dependent maquiladoras vary from low to very high. We conclude with policy implications for Mexico as well as other countries facing competition from Chinese EPZ producers in international markets.

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  • Sargent, John & Matthews, Linda, 2008. "Capital Intensity, Technology Intensity, and Skill Development in Post China/WTO Maquiladoras," World Development, Elsevier, vol. 36(4), pages 541-559, April.
    • Handle: RePEc:eee:wdevel:v:36:y:2008:i:4:p:541-559
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    2. Jordaan, Jacob A., 2011. "FDI, Local Sourcing, and Supportive Linkages with Domestic Suppliers: The Case of Monterrey, Mexico," World Development, Elsevier, vol. 39(4), pages 620-632, April.
    3. Jacob A Jordaan, 2017. "Producer firms, technology diffusion and spillovers to local suppliers: Examining the effects of Foreign Direct Investment and the technology gap," Environment and Planning A, , vol. 49(12), pages 2718-2738, December.
    4. André Pineli & Rajneesh Narula, 2023. "Industrial policy matters: the co-evolution of economic structure, trade, and FDI in Brazil and Mexico, 2000–2015," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 50(2), pages 399-444, June.
    5. Gallagher, Kevin P. & Shafaeddin, M., 2010. "Policies for industrial learning in China and Mexico," Technology in Society, Elsevier, vol. 32(2), pages 81-99.
    6. Carlos Enrique Cardoso Vargas, 2017. "Does the type of neighbor matter? Heterogeneous export spillovers on domestic companies in Mexico," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 32(2), pages 255-292.
    7. Jesús Cañas & Roberto Coronado & Robert W. Gilmer & Eduardo Saucedo, 2013. "The Impact of the Maquiladora Industry on U.S. Border Cities," Growth and Change, Wiley Blackwell, vol. 44(3), pages 415-442, September.
    8. Mario Pianta, 2018. "Technology and Employment: Twelve Stylised Facts for the Digital Age," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 61(2), pages 189-225, June.
    9. Fox, Stephen, 2016. "Leapfrog skills: Combining vertical and horizontal multi-skills to overcome skill trade-offs that limit prosperity growth," Technology in Society, Elsevier, vol. 47(C), pages 129-139.
    10. Kevin P. Gallagher & Mehdi Shafaeddin, 2009. "Policies for Industrial Learning in China and Mexico," Trade Working Papers 22782, East Asian Bureau of Economic Research.
    11. Sargent, John & Matthews, Linda, 2009. "China versus Mexico in the Global EPZ Industry: Maquiladoras, FDI Quality, and Plant Mortality," World Development, Elsevier, vol. 37(6), pages 1069-1082, June.

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