Nearshoring in Mexico: diverse options for industrial upgrading

Gary Gereffi

Sede Subregional de la CEPAL en México (Estudios e Investigaciones) from Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL)

Abstract: Mexico has been a “nearshoring” platform for the United States (U.S.) economy on a regular basis in recent decades. However, the nature and degree of Mexico’s integration within North America, as well as its ability to create and capture value and innovation rents in its core domestic industries, have varied over time. Previous examples of nearshoring in Mexico in the automotive and textile and apparel industries, we well as regional trade agreements like NAFTA and USMCA and global trade conflicts such as the U.S.-China trade war, have made Mexico a likely candidate to take advantage of recent U.S. industrial policies to strengthen strategic American supply chains. Current U.S. nearshoring opportunities in industries such as semiconductors, electric vehicles, pharmaceutical active ingredients, and rare-earth minerals such as lithium will require active industrial policies in Mexico related to infrastructure (e.g., ports, electricity, water), attracting appropriate foreign direct investment, capability-building in local firms, and building a skilled workforce for new industries. While some investments are occurring at the subnational level in Mexico, a more focused national response will multiply potential nearshoring benefits for Mexico.

Date: 2025-02-07
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Persistent link: https://EconPapers.repec.org/RePEc:ecr:col094:81251

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