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Mexico’s Growing Role in the Auto Industry Under NAFTA: Who Makes What and What Goes Where

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  • Thomas H. Klier
  • James M. Rubenstein

Abstract

In this article, we explore the impact of NAFTA on Mexico?s motor vehicle industry?specifically, on Mexico?s integration into North America?s automotive industry and the subsequent increase in intra-industry trade in automobiles.5 The auto industry has undergone dramatic changes over the past 20-plus years. First, we provide a brief summary of the history of auto production and related trade policies in Mexico before NAFTA. Then we provide a detailed analysis of Mexico?s light vehicle production and exports from 1990 through 2016. Our analysis shows how Mexico has become an integral part of North America?s motor vehicle industry. In addition to aggregated industry-wide statistics, we are able to draw on data that identify the specific country of sale for vehicles produced in Mexico. These data are available on an annual basis from 2005 through 2014. Finally, we discuss how the observed trends in Mexico?s light vehicle production and trade have affected the spatial distribution of auto production within Mexico and across North America. We show that as in the United States, the motor vehicle industry has agglomerated in Mexico.

Suggested Citation

  • Thomas H. Klier & James M. Rubenstein, 2017. "Mexico’s Growing Role in the Auto Industry Under NAFTA: Who Makes What and What Goes Where," Economic Perspectives, Federal Reserve Bank of Chicago, issue 6, pages 1-29.
    • Handle: RePEc:fip:fedhep:00027
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    References listed on IDEAS

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    1. Fidelma Murphy & Terrence McDonough, 2012. "US auto companies’ ownership and control of production in Mexico’s ‘maquiladoras’," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 5(3), pages 413-434.
    2. Gary Clyde Hufbauer & Jeffrey J. Schott, 2005. "NAFTA Revisited: Achievements and Challenges," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 332, April.
    3. Thomas Klier & James Rubenstein, 2008. "Who Really Made Your Car? Restructuring and Geographic change in the Auto Industry," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number wrmyc.
    4. Thomas H. Klier, 2015. "Auto Production Footprints: Comparing Europe and North America," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q IV, pages 101-119.
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    Cited by:

    1. Jorge Carreto Sanginés & Pasquale Pavone & Margherita Russo & Annamaria Simonazzi, 2019. "Digital upgrade in the automotive supply chain in Mexico: issues and challenges," Department of Economics 0153, University of Modena and Reggio E., Faculty of Economics "Marco Biagi".
    2. López Noria Gabriela, 2021. "The Impact of Trade Liberalization on the Mexican Automobile Industry: Evidence from the First 20 Years of NAFTA," Working Papers 2021-10, Banco de México.

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    Keywords

    Mexico; automotive industry: NAFTA;

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