The NAFTA (North American Free Trade Agreement) and some social-economic consequences for Mexico: the maquiladoras case

Abstract

In the 1970s, the internationalization of businesses heralded a new set of issues for national governments, such as formal employment in multinationals, increasingly sophisticated accounting mechanisms used by multinationals (such as transfer pricing) and outsourcing, among other factors. Each state has responded differently to the challenges of globalization: they sometimes try to resist the erosion of labour rights, as seen in most European Union countries, and in other cases they have changed their legislation to loosen restrictions on working conditions and attract foreign direct investment – the phenomenon studied in this article. This study analyses the labour market in Mexico since the changes made to attract more large-scale investors and pave the way for its joining the North American Free Trade Agreement (NAFTA). More specifically, the examination focuses on the country’s maquiladoras. Our founding hypothesis is that the current state of affairs in Mexico is the outcome of a set of internal factors and events in the international system. At the end, some socioeconomic consequences of the free trade agreement are identified, taking as an example the case of NAFTA/Mexico. It is hoped that the analysis of a country with similar socioeconomic characteristics to Brazil may enable a comparison between the two countries with a view to supplementing future studies and decision-making in Brazil.

Keywords: Globalization; Development; Free Trade Agreement.

Received on October 16, 2012 / Accepted on November 30, 2012.