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

John Sargent and Linda Matthews

World Development, 2008, vol. 36, issue 4, 541-559

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.

Date: 2008
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Persistent link: https://EconPapers.repec.org/RePEc:eee:wdevel:v:36:y:2008:i:4:p:541-559

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