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About this book

This volume discusses the development of the Mexican manufacturing sector during the NAFTA era. This book pursues several objectives simultaneously. Firstly, it gives continuity to and revitalizes the structuralist economic perspective and debate proposed by Latin American development theory. Secondly, it analyzes the trend of structural heterogeneity in Mexico from 1994-2008 using the manufacturing sector as a case study. Lastly, it uses methodologies established by the Economic Commission for Latin America and the Caribbean (ECLAC) to provide an in-depth statistical evaluation of the effects of economic liberalization on structural change, labor productivity, production concentration, and dynamic competitiveness in the main industries of the sector: food, beverages, and tobacco; textiles and apparel; chemistry; electromechanics.

Providing historical context for the evolution of Mexico’s economy after trade liberalization, this volume will be of interest to students, scholars, and researchers of industrial economics, economic development, Latin-American studies, developing studies, international economics, international relations, political science, and economic geography.

Table of Contents

Frontmatter

Chapter 1. Introduction

Abstract
In Mexico, public policy has adhered to economic orthodox guidelines in exemplary fashion. Capitalizing on the advantages afforded by geographic proximity to the US market and the signing of the North American Free Trade Agreement (NAFTA), large transnational corporations have invested in the country; and the growth of exports of Mexican-assembled products has outpaced world trade as a whole. Nonetheless, the external competitiveness of the model’s leading industries has been unable to counteract the deindustrialization process in non-globalized subsectors of the economy, which have to compete in the domestic market with imports that benefit from the adopted measures. In this context, this book aims to analyse, for the period 1994–2008, the effects of public policy on labour productivity, production concentration and dynamic competitiveness in the main Mexican manufacturing industries (Food, beverages and tobacco; Textiles and apparel; Chemistry; Electromechanics).
Raúl Vázquez-López

Chapter 2. Structural Heterogeneity in Mexican Manufacturing Industry, 1994–2008

Abstract
This chapter analyses the stagnation of productivity and the increasing structural heterogeneity of Mexican manufacturing industry as a whole in the period 1994–2008. Traditional indicators of dispersion are estimated for 200 activity classes, 50 branches and nine divisions of the manufacturing sector; and these corroborate the widening disparity in productive efficiency between globalized activities and traditional industries that has been reported in other works. The study also provides a more detailed account of the intensification of this trend in the first decade of the present century and the specific characteristics of within-sector heterogeneity. Other results obtained using the shift-share technique show that structural change contributes very little to productivity growth, and that technological progress is concentrated in just a few activities that have weak local linkages and add little value to the content of the goods they make.
Raúl Vázquez-López

Chapter 3. Market Concentration and Structural Change: The Food, Beverages, and Tobacco Industry

Abstract
This chapter analyses how major corporations in the food, beverage and tobacco industries in Mexico have grown, as well as potential implications for the structure and efficiency of this sector. Building a labour productivity indicator for 12 branches and 38 classes of activities for the 1994–2008 time period, and applying these to the series obtained from shift-share decomposition analysis, revealed growing structural heterogeneity along with increasing efficiency for a limited number of activities. Similarly, the results indicate that the impact of workers changing sectors on the evolution of productivity varies as a function of the business strategies adopted, but was negative on the whole for the period, evidence of a regressive structural change in the sector.
Raúl Vázquez-López

Chapter 4. The Transformation of the Textile and Apparel Sector After NAFTA

Abstract
Based on the preparation of a database that estimates production output numbers, working hours, and their ratio for 5 branches and 27 categories of economic activity, this chapter analyses the evolution of the textile industry in Mexico in the 1994–2008 period, placing particular emphasis on the effects that the insertion of its main activities in global value chains has had on the sector’s structure. The shift-share type methodology reveals that the incipient process of upgrading following the signing of the NAFTA has had mixed results and was not based on a generalized technological transformation. At the same time, the use of the ECLAC’s Competitive Analysis of Nation’s (CAN) methodology for the top twenty export products in 2008 showed a sharp loss of competitiveness of the sector in the 2001–2008 period. The main finding was, therefore, to document the evolution of the global insertion of the Mexican textile and apparel industry from a panorama based on assembly-line style production with low value added to de-industrialization passing through a process of interrupted upgrading.
Raúl Vázquez-López

Chapter 5. The Chemical Industry and the Globalization Process

Abstract
The withdrawal of the state of the active promotion of productive development has left the latter in the hands of big business. This paper examines the consequences of global dynamics on the performance and operating logics of the Mexican chemical industry taken as a whole. For this purpose, it appeals to statistical analysis, especially to the differential structural technique.
Raúl Vázquez-López

Chapter 6. Global Insertion and Dynamic Competitiveness in the Automotive and Electromechanical Industry

Abstract
This chapter analyses the dual functioning of the Mexican electromechanical sector between 1994 and 2008, separating globalized activities from those linked to the domestic market. An estimation of labour productivity in 52 industrial classes finds that structural heterogeneity increased particularly in the 1994–2001 subperiod, alongside technical and organizational improvements that were increasingly concentrated in a small number of subsidiary companies of transnational automotive-assembly enterprises. The application of the shift-share technique also revealed the absence of any significant structural change. Lastly, an extension of the methodology to evaluate competitiveness—developed by ECLAC—and its application to a second database that reclassifies 1345 foreign trade products, makes it possible to contrast these changes with the dynamism of the global production networks in which the leading firms of the sector in Mexico are engaged.
Raúl Vázquez-López

Chapter 7. Conclusions

Abstract
The pioneers of the concept of structural heterogeneity argued that the modernization of poorly integrated structures, which were technologically dependent on the exterior and unable to transmit and diversify technological progress, could foster imbalances within the productive apparatus. In the specific case of manufacturing industry in Mexico, the rapid trade liberalization and economic reforms implemented from the mid-1980s onwards fuelled a meagre modernization process, restricted to a very small number of activity classes generally engaged in global value chains. Although these “leading” activities in Mexico are governed by a very wide range of global corporate strategies that determine the type and level of relations, they maintain with the domestic economy, among many other things, the fact is they tend to manufacture goods of low value added and have weak linkages with the local economy.
Raúl Vázquez-López

Backmatter

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