generating and sustaining backward linkages between maquiladoras and local suppliers in northern mexico abstract despite 25 years of growth mexico s in bond assembly or maquila operations use very little material inputs that are made in mexico mexican content is less than 2 of value added and those coming from the northern border region are even more miniscule some of the reasons for the paucity of local sourcing are reviewed with particular emphasis on corporate and plant purchasing arrangements mexican policies designed to support national suppliers are reviewed and the authors offer suggestions that stress the need for a regional focus that concentrates on fostering local technological capacities the study relies in part on surveys of plant managers and corporate purchasing officers

competition regimes and air transport costs the effects of open skies agreements the relevance of transport costs has increased as liberalization continues to reduce artificial barriers to trade is it worthwhile to implement policies designed to increase competition in transport markets focusing on air transport this paper quantifies the effects of liberalization of air cargo markets on transport costs between 1990 and 2003 the united states implemented a series of open skies agreements providing a unique opportunity to assess the effect that a change in the competition regime has on prices in our sample open skies agreements reduce air transport costs by 9 and increase by 7 the share of imports arriving by air those results hold for developed and upper middle income developing countries but for lower middle income and low income developing countries open skies agreements do not reduce air transport costs d 2005 elsevier b v all rights reserved

hedging price volatility using fast transport abstract purchasing goods from distant locations introduces a significant lag between when a product is shipped and when it arrives these transit lags are trade barriers for firms facing volatile demand who must place orders before knowing the resolution of demand uncertainty we provide a model in which airplanes bring producers and consumers together in time fast transport allows firms to respond quickly to favorable demand realizations and to limit the risk of unprofitably large quantities during low demand periods the model predicts that the likelihood and extent to which firms employ air shipments is increasing in the volatility of demand they face decreasing in the air premium they must pay and increasing in the contemporaneous realization of demand we confirm all three conjectures using detailed us import data fast transport thus provides firms with a real option to smooth demand volatility on international markets and we provide simple calculations of that option value this enables us to identify how the option value relates to goods characteristics and to changes in air transport premia associated with technological and policy change including the introduction of jet engines and liberalization of trade in air services

development trajectories and new comparative advantages costa rica and the dominican republic under globalization summary this paper compares the experiences of costa rica and the dominican republic in creating new comparative advantages in manufacturing exports and its impact on economic development it makes three main arguments first the apparel sector is currently unlikely to act as an engine of economic development second high public spending in health and education and selective targeting of foreign investment have been fundamental in the creation of comparative advantages away from apparel into exports with higher technological content in costa rica third the new export sectors still lack sufficient linkages to the rest of the economy and most of their value added goes into profits for the transnational corporations

corporate strategies for fdi in the context of latin america s new economic model abstract the nem in latin america radically altered foreign direct investment inflows to the region previously restrictive national policies became ones that facilitated foreign direct investment fdi in the context of new business opportunities transnational corporations tncs took a new look at the region in the context of their evolving corporate strategies examples being efficiency seeking corporate strategies in the automotive mexico and the apparel industry caribbean basin and the market access strategy for services in the telecommunications and electrical energy industries brazil two interrelated problems arose a tnc objectives were often attained but those linked to national development goals often were not and b national policies did not channel fdi to priority development activities

distance time and specialization lean retailing in general equilibrium transport time increases with distance traveled and time is valuable we show the implications of these facts for global specialization and trade products where timely delivery is important will be produced near the source of final demand where wages will be higher as a result in the model timely delivery is important because it allows retailers to respond to final demand fluctuations without holding costly inventories and timely delivery is possible only from nearby locations using a unique dataset that allows us to measure the retail demand for timely delivery we show that the sources of u s apparel imports have shifted in the way predicted by the model with products for which timeliness matters increasingly imported from nearby countries jel f1 transporting goods and people costs time and money and both transport fees and time in transit generally increase with the distance traveled these facts imply an incentive to economize on distance and the equilibrium effects

reducing the cost of demand uncertainty through accurate response to early sales traditionally fashion products have incurred high losses due to stockouts and inventory obsolence because long lead times coupled with a concentrated selling season force all or at least most production to be committed before demand information is available under a quick response system lead times are shortened sufficiently to allow a greater portion of production to be scheduled in response to initial demand we model and analyze the decisions required under quick response and give a method for estimating the demand probability distributions needed in our model we applied these procedures with a major fashion skiwear firm and found that cost relative to the current informal response system was reduced by enough to increase profits by 60 relative to the cost that would have been incurred if no response were used optimized response reduces cost by enough to roughly quadruple profits

a conceptual framework for the study of rural places three attributes of rural america reflect its fundamental nature a a relatively sparse population b its interdependence with urban and global systems and c its enormous diversity these attributes are frequently neglected in rural studies work when they are not recognized conclusions pertaining to rural places are seldom reliable the 1990 census reports that 97 of the land area of the forty eight contiguous states is rural and about 80 is nonmetropolitan this vast area provides residence for 22 5 and 24 8 of the population respectively sparsity of population is of value to some people most of the time and other people part of the time as well as for certain space using activities such as farming and forestry nevertheless space equates to distance and overcoming distance requires a sacrifice of time and other resources crosson fuguitt hart farming occupies about one half the land area of rural america farming and agricultural services provide less than 10 of the total employment in nonmetropolitan places further there is a remarkable similarity in the sectoral shares of employment between metropolitan and nonmetropolitan counties mills thus there is little factual basis for the common practice of treating agricultural and rural as synonymous great interdependence exists between rural and urban systems rural fundamentalist rhetoric to the contrary weber it is difficult to imagine a single significant rural social problem that can be understood or addressed in isolation from urban or global systems jacobs

timeliness and agglomeration an important element of the cost of distance is time taken in delivering final and intermediate goods we argue that time costs are qualitatively different from direct monetary costs such as freight charges the difference arises because of uncertainty unsynchronised deliveries can disrupt production and delivery time can force producers to order components before demand and cost uncertainties are resolved using several related models we show that this generates a hitherto unexplored mechanism for clustering if final assembly takes place in two locations and component production has increasing returns to scale then component production will tend to cluster around just one of the assembly plants

an institutional framework for designing and monitoring ecosystem based fisheries management policy experiments indicator systems are seen as central tools for ecosystem based fisheries management helping to steer fisheries towards sustainability by providing timely and useful information to decision makers without testing hypotheses about the links between policies and outcomes however indicator systems may do little more than promote ad hoc policies possibly even prolonging the transition to sustainable fisheries the institutional analysis and development iad framework is a robust framework that has been used extensively to design policy experiments and empirically test theories and models linking ecological economic systems institutions and the sustainability of common pool resource systems a modified iad framework is developed that transparently encompasses both process oriented pressure state response psr and structurally oriented sustainable livelihood indicator frameworks thus providing a platform for ecosystem based fisheries management policy experiment design and monitoring an institutional approach to fisheries management facilitates critical examination of important cross cutting issues including assumptions regarding what comprises sustainability and how market government and civil society organizations use strategic investments in capital assets and institutions to achieve sustainability objectives the emphasis on capital assets keeps attention on the relative merits of alternative investment options in policy experiments

fragmentation and east asia s information technology trade this article studies the growth and determinants of information technology it trade in the asia pacific region we argue that the rise of it trade must be understood within the context of increasing vertical fragmentation of production processes that has occurred over the past two decades to evaluate this empirically we estimate a set of pooled bilateral it export equations for eight asian countries the usa and the eu where foreign direct investment fdi inflows are introduced as a proxy for fragmentation we apply a panel cointegration approach that allows for heterogeneity in short run dynamics and in fixed effects consistent with production fragmentation we find that the evolution of it trade can be explained in part by traditional income and relative price effects but also by fdi inflows

workers rights in open economies global production and domestic institutions in the developing world previous large n research suggests that globalization could have either positive or negative consequences for labor rights in developing nations this article examines the ways in which domestic political institutions and interests conditions the effects of economic globalization it develops several hypotheses regarding the impact of domestic factors on labor rights outcomes and uses the case of costa rica to assess these hypotheses the result is that although segments of the costa rican economy and labor force have benefited from industrial upgrading in recent years the enclave nature of the export oriented economy and the historical repression of organized labor render difficult the achievement of some internationally recognized core labor rights the article concludes by discussing some of the issues for future research that are highlighted by the costa rican case

latin america s new economic model micro responses and economic restructuring abstract this paper introduces a special issue on the microeconomics of latin america under the new economic model nem the paper reviews the rationale and policies of the nem and analyzes the impact of the reforms at the macroeconomic sectoral and microeconomic levels at the firm level the contributions to this issue demonstrate that a considerable adjustment process is taking place as sectoral structural change indices demonstrate however this has not resulted in widespread shifts of resources between sectors nor has it resulted in significant improvement in overall employment productivity and growth the authors analyze the reasons for this disjuncture and suggest policy alternatives

open skies over the middle east the dynamism of air traffic markets in the middle east obscures the persistence of restrictions on international competition but how important are such restrictions for passenger traffic this paper uses detailed data on worldwide passenger aviation to estimate the effect of air transport policy on international air traffic the policy variable is a quantitative measure of the commitments under international agreements the paper analyzes for the first time not only bilateral agreements but also plurilateral agreements such as the one between arab states the analysis finds that more liberal policy is associated with greater passenger traffic between countries higher traffic levels appear to be driven primarily by larger numbers of city pairs being served rather than by more passengers traveling along given routes to demonstrate the quantitative implication of the estimates two liberalization scenarios in the middle east are evaluated deepening the plurilateral agreement among arab states would lead to a 30 percent increase in intraregional passenger traffic widening the agreement to include turkey would generate significantly larger gains because current policy vis a vis turkey is much more restrictive

bringing the firm back in local decision making and human capital development in mexico s maquiladora sector summary the recent decline in mexico s maquiladora sector provides an opportunity to reassess the sustainability of basing national economic competitiveness on low wages 1 focusing on human capital as an important component of equitable growth the authors argue that models of its development which consider market factors alone are inadequate combining their own case study with a review of other studies over the past 20 years the authors propose a management centered as opposed to a market centered model of human capital development as a basis for discussing the relative merits of in bond industrial programs and considering measures to improve levels of human capital

foreign investment and the global geography of production why the mexican consumer electronics industry failed abstract explanations of industrial development in late developing countries have become narrowly focused on the capability of governments to promote pressure or punish nationally owned firms often overlooked is the contribution of firms both national and multinational in propelling coordinating and determining the path and location of such development this paper examines the conditions that led to the decline of mexico s consumer electronics industry and presents new evidence to support a more complex account of the role of both industrial and state actors within this process in contrast to the traditional market or state based theories we argue that the decline of mexico s consumer electronics industry largely resulted from its foreign investment regime particularly the timing of investment and the geographical locations of local and foreign manufacturers and the subsequent depth and quality of the relationships between these firms the differences between mexico s regime and that of taiwan during the same period provide further evidence of the important role that foreign firms play in inserting local suppliers into the global production chain we argue that mexico s foreign investment regime and the resulting weak local foreign ties rather than inadequate state policy sealed the fate of mexico s once thriving domestic electronics industry

maquila economic reform and corporate strategies abstract corporate strategies in maquila have changed over time while they were originally geared only to the exploitation of low paid low skilled labor nowadays firms are upgrading human capital and increasing the scope and technological complexity of production processes the adoption of the new economic model in host countries aimed precisely at this type of strategy change but cannot solely be credited for it in addition policies regarding maquila under the nem did not achieve all the stated goals regarding corporate strategy change trends in local procurement and technology transfer are still unsatisfactory strengthening of local supply and absorption capabilities is required

formation of foreign direct investment clustering a new path to local economic development the case of qingdao jun yeup kim and le yin zhang formation of foreign direct investment clustering a new path to local economic development the case of qingdao regional studies this paper investigates the clustering of chinese electronics manufacturers large and small alongside established foreign producers in qingdao north china it examines how the supplier buyer linkages between foreign invested enterprises fies and local firms have driven the development of a successful electronic industry cluster around development zones established by the local authority underpinning the success of the large domestic firms both at home and abroad it also analyses how fies collaboration with local firms fosters local economic development in qingdao by integrating the theoretical perspectives of the hub and spoke model from economic geography and flagship and five partner s model in the science of strategic management it develops its own theoretical lens to investigate the inter firm network between the fies and local fir

transportation costs and international trade in the second era of globalization while the precise causes of postwar trade growth are not well understood declines in transport costs top the lists of usual suspects however there is remarkably little systematic evidence documenting the decline this paper brings to bear an eclectic mix of data in order to provide a detailed accounting of the time series pattern of shipping costs the ad valorem impact of ocean shipping costs is not much lower today than in the 1950s with technological advances largely trumped by adverse cost shocks in contrast air shipping costs have dropped an order of magnitude and airborne trade has grown rapidly as a result as a result international trade has also experienced a significant rise in speed

combining export processing zones and regional free trade agreements lessons from the mexican experience abstract export processing zones epzs and regional trade agreements are two common initiatives utilized by developing country governments in order to increase the wealth creation effects of today s international trade and investment system in this paper we argue that these two initiatives are driven by somewhat incompatible economic rationales based on the north american experiment in combining a major epz mexico s maquiladoras within the terms of a regional free trade agreement the north american free trade agreement we test to determine whether the logic of a regional integration initiative or that of the epz is dominate our results suggest that the competitive dynamics of mexico s epz industry have not been fundamentally altered by nafta s regional incentives we conclude with recommendations for policy makers in other developing countries that might be considering attempting to impose regional development schemes on the large and politically powerfully tncs that tend to dominate the global epz industry

live long and prosper collective action social capital and social vision abstract to understand the social driving forces that lead to environmental change we must account for the role of social interactions the development of norms of behavior and the institutionalization of rules and norms the development of social capital this paper demonstrates the utility of social capital theory by articulating linkages between human decision making at individual and collective levels and social vision an important research focus within the emerging ecological economics research tradition social capital theory clarifies relationships between social interactions and outcomes that contribute to the production of environmental quality public peace and economic prosperity necessary factors for long term social and ecological sustainability

logistic infrastructure and the international location of fragmented production abstract casual evidence suggests that multinational companies increasingly look for places with adequate transport and logistic infrastructure to locate affiliates that participate in cross border production sharing yet there are no systematic empirical analyses examining how logistic infrastructure interacts with the location decisions made by multinationals most studies on the determinants of fdi address the issue of transportation logistics by examining the impact of distance on the relevant outcome but distance does not capture by itself the quality of the logistic systems in place we overcome this shortcoming in the literature by embedding indicators of infrastructure into an empirical framework that examines whether countries with adequate logistic systems attract more vertical fdi and particularly in industries that are more dependent on logistic services we find that logistic infrastructure positively impacts vertical fdi in addition to the impact typically found on distance a change from the first quartile to the third quartile of the distribution of logistic infrastructure is associated with an average increase in the number of vertically integrated subsidiaries equivalent to 29

flexible production in the auto sector industrial reorganization at ford mexico abstract ford mexico is pursuing a single philosophy of flexible production in its mexican plants but with markedly different results an analysis of three plants one a new assembly plant in the north another an established manufacturing plant in central mexico and the third a labor intensive maquiladora plant in the northern border region shows how the factors of labor relations local labor markets complexity of production and whether the plants are new or established affect the implantation of flexible production the resulting systems implanted do not correspond to the ideal lean production model

export processing zones in the dominican republic schools or stopgaps summary the following paper explores the variable consequences of offshore manufacturing in the dominican republic while foreign transplants have been treated as tenants in most of the country and have thereby made transitory contributions to export and employment growth they have been treated as tutors in the cibao valley and have thereby made more lasting contributions of skill and technology what accounts for the variation i find that the agro commercial elites who have traditionally dominated the cibao valley are simultaneously more tolerant of foreign investment than the import competing industrialists found in the capital of santo domingo and more likely to diversify into manufacturing than the absentee landlords found elsewhere in the country