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#104 Transnational Corporations, Export-Promotion Policies, and U.S.-Mexican Automotive Trade

By Douglas C. Bennett and Kenneth E. Sharpe

Abstract

Automobile manufacture began in Mexico in 1962, following the imposition of local content requirements. The industry was quickly dominated by subsidiaries of transnational corporations, although firms manufacturing parts were required to be majority Mexican-owned. In 1969, the thrust of policy was shifted from import substitution to export promotion, firms being obligated gradually to compensate imports of components with exports of automotive products. After disappointing results in 1974-75, this was reconsidered; but in June 1977 a new auto industry decree reaffirmed the export-promotion direction of policy, significantly increasing the exports required of all automobile firms.

This paper analyzes the setting of the agenda and the bargaining between the Mexican government and the transnational automobile firms (and their home-country governments) over this 1977 decree.

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