The in-bond assembly industry and technical change

Abstract

This article analyses the export offensive made by Mexico, Central America and some Caribbean countries since the mid-1980s. Notwithstanding the differences between them, in all the countries in question this offensive has been aimed mainly at the United States market, has been stimulated by import tariff privileges and other incentives, and has been based on poorly-paid assembly operations: i.e., it involves the in-bond assembly or "maquila" industries. This study seeks to determine whether these industries contribute to local technological development. The answer, based on a questionnaire sent to 75 maquila firms in six countries, must be "yes". The maquila industry uses production techniques close to the best international practices-something matched only in a very few domestic manufacturing firms-and it helps to train human resources and introduce modern concepts of organization and management. Moreover, it makes intensive use of unskilled labour. Consequently, in order to progress towards sustainable development with social equity it would appear to be necessary to turn the maquila industry into an increasingly competitive activity by increasing its productivity and the added value of its products. The evolution of maquila industries in the direction of activities using a more highly skilled labour force is perfectly possible, as the case of Mexico shows, and it will become unavoidable when pressures on the labour market cause real wages to rise, as in Costa Rica. This will not happen automatically, however, and even less so in countries that lack institutions to support that process.

Globalization and Development

“…For this reason, the survival of subsidies will depend less on the tax benefits they offer than on the efficacy of their distribution and production support services and the agglomeration economies they manage to create. Moreover, it should be noted that, according to a recent ECLAC study (Buitelaar, Padilla and Urrutia, 1999), maquila industries, which tend to develop in free zones, can -under certain conditions-promote various forms of learning and technical progress. In this process, the ability to develop quality control engineering, which improves the chances of gaining a foothold in more specialized product niches with greater value added, is of particular importance.…”

Employment in Latin America: Cornerstone of social policy

“…34-35). For a more detailed analysis of the assembly industry, including both its advantages and disadvantages, see Buitelaar, Padilla and Urrutia (1999) and Buitelaar and Padilla (2000).…”