Do border economies generate comparative advantages for small- and medium-sized enterprises? Evidence from the Maquiladora industry

Birgit Sander

No 806, Kiel Working Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: Maquiladora assembly emerged to solve a specific problem in a specific region. In the mid 1960s, it was designed to absorb unemployment and to foster industrialization at the US-Mexican border. In the course of its development, it developed considerable dynamics with respect to both regional distribution and technological diversification. Beyond initial intentions, maquiladora assembly proved to be a powerful instrument to foster modernization and international integration of the Mexican economy. Maquiladora assembly is based on factor price differentials and a favourable location with respect to the US-market. It has been developed by private agents learning to tap these potentials. They successfully intensified labour division among themselves. Most importantly, they invented so-called Shelter Plan arrangements as privately marketed services to overcome risk barriers to international integration. A passive, i.e. liberal stance of economic policy proved to be supportive. The implication for economic policy in transformation economies is that an adequate assignment of responsibilities among market and state is at least as important as efficient labour division among private agents.

JEL-codes: D20 F15 (search for similar items in EconPapers)
Date: 1997
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:806

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