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The Mexican auto industry and the U.S.

19 August 2014

Friend or foe?  Nathaniel Parrish Flannery, writing in Forbes, sees the growth in the Mexican auto industry as beneficial to the United States overall, but whether it benefits Mexico is another question.

“Mexico isn’t taking jobs from the U.S.[...] “Because of integrated supply chains, up to 40 percent of the content of the products Mexico exports comes from the U.S.”

[...] since NAFTA came into force in 1994, foreign direct investment (FDI) in North America has increased nearly sixfold from $110 billion per year in 1992 to $650 billion per year in 2010, and today more than $1 billion dollars of goods and services cross the U.S.-Mexico border every day.”

[...]

“The North American automobile industry is one of the most compelling cases of economic integration in the world,” Tony Payan, director of the Mexico Center at the Baker Institute for Public Policy at Rice University, told me.

traffic-mexico-cityFlannery does buy the usual assumption that more personal consumption is an automatic benefit. While he does mention the low wages in this country, and even makes a passing non-snarky reference to Andres Manuel López Obrador (the first time I’ve ever seen that in a U.S. business publication)… in regard to the need for a boost to the internal market… I’m not convinced more automobiles are the way to go, or even desirable. I do have a car, and it is a convenience, but even in relatively new cities like Mazatlán, more and more autos on the streets are a problem, and in a resource scarce country like this one where climate change is a literally life or death issue, increased middle-class consumption should take a … ahem… back seat… to other things.

One Comment leave one →
  1. roberb7 permalink
    19 August 2014 10:21 am

    I, too, question the wisdom of economic reliance on what is likely to be a sunset industry. Now, if they were cranking out electric cars (which the Nissan plant in Aguascalientes might be doing), that would be a different story.

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