Globalization, regional development and local response : the impact of economic restructuring in Coahuila, Mexico

In: http://dspace.library.uu.nl/handle/1874/7408

Abstract

In a world that has become increasingly interconnected over the past decades –economically, politically, socially, and culturally– new challenges are posed to development. Since the 1980s, development has increasingly become interpreted in terms of increasing integration into the world economy. Export-oriented manufacturing became widely viewed as the surest recipe for realizing economic growth while reducing income inequality, and the role of foreign direct investments became increasingly important in development strategies worldwide. However, not every region, industry and social group managed to become successfully integrated into the world economy. In order to explain why these processes of economic restructuring have had such a differential impact, this study situates developments within a wider historical social and political context to establish how these processes of globalization are mediated at the regional and local level. The main object of study concerns the drastic socioeconomic transformation that has taken place in the state of Coahuila –situated in the northeast of Mexico, bordering the United States– over the past three decades. In particular since the start of NAFTA in 1994, Coahuila has become one of Mexico's most successful export-oriented manufacturing states, most importantly as a result of the large number of foreign direct investments it received. However, the effects of these developments have been unevenly distributed among its sub-regions. The main research findings have demonstrated that Coahuila's dominant development strategy since the 1970s has become increasingly successful in its own terms. However, this study also indicated that the spread of these investments throughout Coahuila's sub-regions has been highly uneven, both in a quantitative and qualitative sense. These differential outcomes strongly depend on the role of specific local conditions and local actors. The research findings have identified several important social and political key variables that have shaped the specific regional development outcomes, and which hold general value for further study of the global-local nexus: the role of local private initiatives; the role of local industrial traditions; the role of local labor relations and the role of the local political environment. Questions must also be raised about its ability to contribute to sustained, long-term growth with equity. The strong increase in foreign direct investment, as evidenced in Coahuila, had resulted above all from the strong growth of the U.S. economy in the 1990s and the low Mexican wage levels in the aftermath of the 1994-1995 peso crisis, rather than on endogenous economic growth. Since the turn of the century, many foreign-owned export-oriented companies in Mexico, in particular labor-intensive assembly industries, moved their operations to lower wage-regions resulting from decreasing consumer demand in the United States, in combination with the prospect of heightened international competition from Central America and China. The key issue appears to be not whether, but how regions and localities become linked to the world economy. The more capital-intensive and value-added foreign direct investments –which are generally considered to offer the best prospects for local development– usually prefer urban regions that already possess a strong industrial tradition, institutes of higher (technical) education, skilled labor, etceteras. Most labor-intensive assembly industries –which generally tend to counter competitive pressures by cutting costs rather than by innovation and upgrading– are attracted to localities with an abundance of cheap, unskilled labor, which are found mostly in localities with little economic alternatives. This development strategy –at best– only provided short-term economic success.