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Economy, Manufacturing

maquiladoras, Mexican economy, oil revenues, rural regions, cigars

Mexico has moved away from an economy dominated by oil revenues in the early 1980s, to one in which diversified manufacturing plays a much more significant role. Manufacturing employed approximately 12 percent of economically active Mexicans in 1950; this figure had climbed to 19 percent by 1990. In 2000 manufacturing accounted for 20.70 percent of the nation’s GDP. The development of manufacturing in Mexico has included two important subsectors: an assembly and light manufacturing sector (whose businesses are known as maquiladoras in Spanish) that is concentrated largely along the country’s northern border with the United States, and a capital-intensive sector that includes industries such as steelmaking and automobile manufacturing.

Many large foreign companies, owned primarily by U.S. and Japanese investors, have located hundreds of maquiladoras in Mexico. These businesses produce specific parts of products to be sold in or exported from the home country, or they import parts from abroad, assemble the products in Mexico, and then ship the completed products back to the home country. This sector has been one of the fastest-growing in the Mexican economy, contributing significantly to economic growth, and providing new employment even during the years that followed the 1994 economic crisis.

Mexican factories produce motor vehicles, cement, sulfuric acid, petrochemicals, metals, rubber products, plastics, paper products, and a variety of consumer goods, including cigars and cigarettes, textiles, clothing, shoes, glassware, beer and soft drinks, household appliances, and radios and televisions. Mexico built a thriving iron and steel industry after World War II, with much of this manufacturing capacity located in the city of Monterrey. Mexico doubled its steel production between 1970 and 1980, although production remained stagnant throughout the 1980s. In recent years Mexico’s capital-intensive industries, such as steelmaking, have become more competitive as modern factories with automated equipment have been built. Production of steel began to grow again in the 1990s, and some Mexican businesses acquired control over foreign companies.

Mexico’s most important manufacturing centers include the combined urban area of the Federal District and Mexico state, as well as the cities of Monterrey and Guadalajara. Since the late 1970s, Mexico has attempted to decentralize its manufacturing base and to encourage foreign investment in areas of central Mexico outside of Mexico City or the Federal District. While the nation has achieved some success in this area, most of Mexico’s poorer, rural regions have not attracted industry.

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