The adoption of export-led industrialization strategies in many Latin American and Caribbean countries in the 1980s has led to an intense debate over whether such strategies promote self-sustaining growth, as they have in the East Asian “tigers” of Singapore, Hong Kong, South Korea, and Taiwan. Patricia Wilson’s book focuses on one key element of this debate overlooked in much of the previous literature: the maquiladoras’ capacity to create local linkages to stimulate industrial growth and diversification beyond the enclave assembly-type industry characteristic of much export processing in Mexico and other Latin American and Caribbean countries.
Domestic linkages of export processing in Latin America and the Caribbean have remained very small. Even in more developed economies like Mexico, which started its Border Industrialization Program in 1964, domestic content has remained at a paltry 1.5 percent. Comparing this with East Asia, where domestic content is much higher and has led to more capital-intensive, endogenous growth, Wilson attributes the difference primarily to historical factors and the role of the state. Her discussion of industrial development policy in the four East Asian tigers demonstrates that “export-led industrialization does not require a small role for the state, an end to import substitution, or total submission to foreign capital,” as has occurred in Latin America and the Caribbean (p. 29). East Asian states have relied heavily on state intervention in the economy, including control over foreign capital and technology and the protection and development of domestic industries; they cannot be seen as examples of free market policies, as some commentators have suggested. Mexico also was able to move away from assembly industries into more capital-intensive manufacturing, such as automobile subassembly. This was possible particularly after 1982, when the economic crisis and devaluation lowered maquiladora wages; but the country still depended heavily on foreign capital.
As Wilson shows, foreign-owned maquiladoras, regardless of region or sector, remain integrated in their U.S. supplier networks and make little use of domestic materials. Using a survey of managers in 71 maquiladora plants both in the interior and along the border, Wilson concludes that the highest local content is found among Mexican-owned, interior maquiladoras, particularly in Guadalajara. These factories continue to produce for the domestic market but have turned to exports to survive the decline in domestic demand since the economic crisis.
Wilson is correct in identifying foreign capital as the primary deterrent to the greater use of domestic products. Her remedy, however, focuses exclusively on Mexican or host-country development policy and ignores the critical role of U.S. trade policy, particularly tariff provisions such as 806/807, which mandates the use of U.S.-made materials. U.S. trade policies are designed to maintain control over production and skilled jobs in the United States and to utilize Mexico and other Latin American and Caribbean countries primarily as a source of cheap labor. This strategy is intended to reduce production costs and increase the U.S. competitive advantage in an increasingly global market. As Wilson herself suggests, NAFTA (the North American Free Trade Agreement) is only likely to accelerate this process and lead to the “maquilization” of the entire Mexican economy.
