Maquiladora << muh kee luh DAWR uh >> is a type of industrial plant located in Mexico or Central America and owned by a foreign corporation for the purpose of assembling products. Most maquiladoras are in Mexico, near its border with the United States, and are owned by U.S.-based multinational corporations. A multinational corporation is a business that is based in one country and has branches, subsidiaries, and plants in other countries. Maquiladoras assemble finished products from component parts that are shipped to the plants, tax-free, from other countries. The plants then ship the finished products back to the originating country or to other countries. Maquiladoras manufacture such goods as electronic equipment, automobile parts, and clothing. Maquiladoras are also called maquilas.
Mexico and the United States established the maquiladora program in 1965. Under the program, U.S. corporations were permitted to export machinery, equipment, and raw materials to factories in Mexico without paying taxes. Mexico and the United States hoped this program would reduce Mexican unemployment and lower expenses for U.S. businesses.
During the 1980’s, the number of maquiladoras in Mexico greatly increased. Trade agreements such as the North American Free Trade Agreement (NAFTA), which took effect in 1994, have made it easier for countries to shift production to plants in Mexico and Central America. The maquiladora system has attracted many corporations by offering tax breaks, relaxed regulations, and cheap labor.
The factories have become an important part of Mexican industrial growth. However, many labor groups and human rights advocates oppose the maquiladora system because workers earn low wages and operate under poor working conditions. In addition, some environmental groups have charged maquiladoras with unsafe or illegal waste-disposal practices.
See also Mexico (Manufacturing) ; Multinational corporation .
