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Though in some quarters maquiladoras are thought of (rightly) as exploitive sweatshops, they are home to some of the most sought-after jobs in Mexico. But the days of the maquiladora defining Mexican industry are ending – Mexico’s broad-based industrial expansion is rapidly reducing the maquiladoras to a minor role in the overall economy.

The $1.3 trillion Mexican economy is a significant market in its own right, but the real meat of the Mexican system is its role in the broader North American labor market. It isn’t so much that Mexican labor is inexpensive, but that the true glory of Mexico is in the cost differential between Mexican and American labor. So long as U.S. labor costs are much higher than Mexican labor costs, there will be a never-ending stream of investment into Mexico to produce goods for export to the United States.

As the global free trade system breaks down and the American shale revolution deepens, all signs point to an ever stronger Mexican boom. More difficult trans-oceanic trade will encourage local Mexican-American trade, and American natural gas exports already are ending blackouts throughout the Mexican system. NAFTA exists – and will thrive – regardless of what happens to the wider world.

For more information on the Mexican economic miracle and the challenges to all of North America that come with it, see Chapter 13 of The Accidental Superpower.

 

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