Maquiladora

Summary of Maquiladora

Export-oriented industries operating in Mexico in a narrow zone along the U.S. border. The zone was established by the Mexican government in response to high unemployment in the region. Foreign firms locating within the zone (mostly U.S. manufacturers) are generally exempt from Mexico's strict foreign investment code. The manufacturers are permitted to import raw and semiprocessed materials duty free, to employ Mexican workers, and to re-export the finished product paying duty only on the value of labor and foreign materials added in Mexico.

Attracted by low wage rates and an improved transportation network, more than seven hundred U.S. firms now operate maquiladoras in the zone.

(Main Author: William J. Miller)