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Manufacturing, International Manufacturing

Mexican border towns, maquiladora, United States industry, comparative advantage, North American Free Trade Agreement

United States industry has become much more international in recent years. Most major industries are multinational, which means that they not only market products in foreign countries but maintain production facilities and administrative headquarters in other nations. In the late 1990s, giant U.S. corporations began a wave of international partnerships, with U.S. companies sometimes merging with foreign companies.

Beginning in the early 1980s, U.S. companies increasingly produced component parts and even finished goods in foreign countries. The practice of a company sending work to outside factories to reduce production costs is called outsourcing. Foreign outsourcing sends production to countries where labor costs are lower than in the United States. One of the first methods of foreign outsourcing was the maquiladora (Spanish for “mill”) in Mexican border towns. Manufacturers built twin plants, one on the Mexican side and one on the United States side. Companies in the United States sent partially manufactured products into Mexico where labor-intensive plants finished the product and sent it back to the United States for sale. Outsourcing to Mexico became more widespread after the North American Free Trade Agreement went into effect in 1994. Firms in the United States also outsource to many other nations, including South Korea, Indonesia, Malaysia, Jamaica, and the Philippines.

In the 1990s, few products were made entirely within the United States. Although a product may be fabricated in the United States, some component parts may have been produced in foreign countries. Despite outsourcing and the international operations of multinational firms, the United States is still a major producer of thousands of industrial items and has a comparative advantage over most foreign countries in several industrial categories.

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