By: Roberto Carlos Ventura
Multinational corporations are creating more problems for Mexico than they alleviate.
Have you ever been in an unbalanced relationship, where one partner seems to be consuming all the good that is within the other? It is a toxic association entailing the fortune of one affiliate at the cost of the other’s well-being. However, what happens when the partners in the relationship are each an entire country? The continuing rise of one country through this relationship imposes threats to the standard of living for unfortunate countries as they are used as stepping stones to achieve even more prosperity. The United States and Mexico share this intimate, virulent relationship. The economic inequality between these states, let alone that of Mexico in and of itself, is poignant. Since the founding of the infamous maquiladora program in 1965––US owned factories on the Mexican side of the border––neoliberalists have praised the growth of multinational corporations and foreign direct investment. We must then ask, are maquiladoras as generous to Mexico as they are to the United States? Or do maquiladoras foist more detriments on Mexico?
Ideally, with economic globalization–the increasing interconnectedness of world economies due to an intensification of cross-border transactions–both the host country and multinational corporation should benefit from the relationship. According to Matthew Krain, a professor of political science and international studies and the author of the Globalization Briefing Paper, improvements in wages, working conditions, and the national employment rate are expected for the host country. However, this has not necessarily been the case for Mexico. Maquiladoras: All You Need to Know, an informative website sponsored by Weebly, a web-hosting service provider, revealed that Maquiladora workers work anywhere from 48 to 60 hours per week, earn only 50 cents to 1 dollar per hour. To understand the purchasing power difference between what a Mexican maquiladora worker and a US minimum wage worker make, it takes a maquiladora worker 1 to 1 and a half hours to buy a single kilogram of rice while it takes a US minimum wage worker 10 minutes to buy that same bag of rice.
Working conditions are appalling. Maquiladora workers are either poorly trained or not trained at all, work with malfunctioning, weary machinery and equipment, and are exposed to dust-born chemicals and dangerous vapors. The only facet of the ideal outcomes of economic globalization that has technically remained true is the increase in national employment. According to Trading Economics, an online platform that offers historical data, forecasts, and trading recommendations, Mexico has a steadily growing employment rate since its last relatively large drop nearing 2010. This growth makes sense considering that introducing foreign factories would undoubtedly increase the amount of jobs available, but it is Mexico’s sustainability that has not correlatively increased with this employment rate trend. Key differences between a country like the United States and a country like Mexico are discernible. Predominantly, the former is developed while the latter is developing. Therefore, it would make sense as to why Mexico faces the conditions it does. But, does it really make sense? Was Mexico’s cross-border relationship with the United States considered? Maquiladoras pose a greater threat to Mexican society and its development than was initially expected.
Though disastrous to the environment and to the people of Mexico, the United States has much to gain from this globalized relationship. Investing in the maquiladora program has lowered the labor costs of manufacturing products, which in turn has made U.S. firms more competitive in the global market, produced more profits for U.S. companies, generated more jobs requiring skilled workers, and, perhaps the most imperative outcome, lowered the price of products for consumers in the U.S.. Maquiladoras have technically improved Mexico’s employment rate, employing nearly a million people, and have enabled Mexico to make enough foreign exchange to stay afloat in the global economy. Nonetheless, it is established that the United States reaps more benefits from the maquiladora program than Mexico. While having more jobs available and remaining relatively stable in the global market, the detriments of maquiladoras outweigh the advantages.
The effects of maquiladoras are apparent beyond the workplace, in fact these effects have altered the composition of Mexico entirely. According to the Mexico Urbanization Review, published by the World Bank Group, Mexico is at an advanced stage of urbanization, with about 77 percent of its population living in urban areas in 2010, having experienced a rapid urbanization throughout the mid-20th century. This period is around the time that maquiladoras became prominent in Mexico. In fact, Mexico in the early 1990s saw rapid economic growth in the north of the country due to an influx of capital and the development of maquiladoras. With the growth of economic activity in the northern megacities, urbanization follows. However, the concentration of economic activity in cities with maquiladoras has fostered an ever-growing economic inequality between regions such as the industrialized north and the less-fortunate, rural south of Mexico. Northern Mexico is favorable to the United States since it is closer in proximity to the US-Mexico border. Therefore, it would be expected that Mexicans seeking employment would pack their bags and migrate to the north.
Nevertheless, in a developing country like Mexico, migration is not feasible for everyone. With the economic disparities between the north and south arise social ramifications, especially gender inequality. Since structural adjustment programs allocate funds from social welfare programs to export sectors and profit-producing endeavors, money spent on health, food, and housing subsidies are almost, if not entirely, eliminated, affecting women the most since they are the ones dependent on these programs. They suffer most from these cutbacks because they are typically the caregivers in the family. Moreover, they are not as mobile as men because women tend to nurse children and the elderly. Consequently, it is not as practical for women to migrate to the northern, maquiladora-abundant cities. Though when women do move to these urban areas, they make up a great sum of the employment in low-skilled, low-waged factories with worsening conditions.
Ironically, these conditions of maquiladoras, both internally and externally, continue to degrade while more foreign direct investment is situated in Mexico. The reason for this paradox lies in the race to the bottom, referring to a dynamic whereby companies seek the lowest level of regulation and taxation, forcing competing governments to lower their standards of labor, human rights, environmental protections, taxes, and other regulation. Basically, Mexico keeps lowering its standards to continue attracting multinational corporations. But of course, as Mexico competes with other developing countries to secure an influx of capital, it sacrifices essential facets of quality of life for its inhabitants. Developing countries are defeating themselves to entice multinational corporations and in Mexico, maquiladora workers bear the brunt of these effects. The internal conditions of maquiladoras comprise the worsening wages and working conditions. The external conditions predominantly include housing conditions and environmental degradation. Mexican workers typically live as squatters near the maquiladoras where they work. The Maquiladoras: All You Need to Know website unveiled abysmal truths of these squatters, stating that these workers live in shacks which they built on unclaimed land with unpredictable living conditions. These shacks typically are made with leftover maquiladora materials, and are surrounded by mud, contaminated rivers, and highly toxic air. The common consequent health issues that arise range from headaches, stomach pains, and chest pains to even birth defects and cancer. Additionally, the race to the bottom prompts the Mexican government to disregard environmental policies and concerns to remain appealing to multinational corporations. Holding these foreign companies accountable for their pollution through regulation and taxation would be a disincentive for any more foreign investment to be allocated to Mexico. In fact, if Mexico enforced or formulated environmental laws, companies could easily move to other developing countries that are willing to not hold them responsible for their not-so environmentally-friendly practices. Therefore, Mexico turns its cheek and allows these companies to do as they please with the environment. Ultimately, Mexico will be on the losing end because multinational corporations are mobile and when they decide to move on, Mexico will have to pay the cost of years of environmental abuse. Industrialization in Mexico has already led to more emissions, contributing to global warming and a deterioration of air and water quality. These corporations have also failed to dispose of their waste properly, instead dumping it into the rivers or nearby colonias where most maquiladora workers live. The water nearby is undrinkable, the skies are filled with brown smog, and the people are ill. Regardless of the effects of maquiladoras, foreign investment continues to influx into Mexico and the unsustainable, reckless practice persists.
As of now, the United States continues to be instrumental in the disorder of Mexico and as consumers of the products manufactured in maquiladoras.We cannot continue to disregard the intolerable acts of multinational corporations on the developing world simply because it does not occur in our own backyards. In an ever-globalizing world, we must think globally and act locally. In other words, take into consideration your everyday actions for they may indirectly contribute to the injustices within the international community. The point has been reached where relationships amongst countries are as common and vital as relationships amongst individuals. A secure, balanced relationship between two countries in the lens of economic globalization can be achieved. A resolution that ensures the benefits of free trade to both parties in the transaction and dodges its potential detriments lies in establishing regulations and abiding by laws that safeguard countries, their people, and their environments.
- Krain, M. (2005). Briefing Paper: Globalization. Retrieved May 1, 2017, from https://secure-media.collegeboard.org/apc/ap05_comp_govpol_glob_42253.pdf
- Maquiladoras: All You Need to Know. (n.d.). Retrieved April 8, 2017, from http://maquiladoras-educateyourself.weebly.com/wages.html
- Mexico Employment Rate. (2017). Retrieved April 8, 2017, from http://www.tradingeconomics.com/mexico/employment-rate
- Kim, Y., & Zangerling, B. (2016, August 24). Mexico Urbanization Review : Managing Spatial Growth for Productive and Livable Cities in Mexico. Retrieved April 10, 2017, from https://openknowledge.worldbank.org/handle/10986/24930
- Korte, G. (2017, May 01). On his 100th day in office, Trump orders review of free trade agreements. Retrieved May 1, 2017, from https://www.usatoday.com/story/news/politics/2017/04/29/100-days-trump-order-review-free-trade-agreements-commerce/101066150/