The in-bond assembly industry and technical change

Buitelaar, Rudolf
Urrutia, Ruth
Padilla, Ramón

1999-04

LC/G.2055-P

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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. Moreover, the maquila industries help in training human resources and introducing modern concepts of organization and management. Furthermore they make 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.

Includes bibliography

WAGES; TRADE PREFERENCES; TECHNOLOGICAL CHANGE; MANPOWER DEVELOPMENT; PRODUCTIVITY; LABOUR MARKET; CAMBIO TECNOLOGICO; CAPACITACION DE LA MANO DE OBRA; COMPETENCIA; INDUSTRIAS DE EXPORTACION; MERCADO DE TRABAJO; PREFERENCIAS COMERCIALES; PRODUCTIVIDAD; SALARIOS; COMPETITION; EXPORT-ORIENTED INDUSTRIES;