Gordon Hanson on the Appeal of Mexico's Labor Cost
The Next Global Manufacturing Superpower
09/20/2012
CNBC
When General Motors, (GM) the largest automaker in the U.S., announced last year it would invest some $540 million to expand its plant in Toluca, Mexico, it joined a growing list of manufacturers seeking more bang for their production buck south of the border.
With lower shipping costs and increasingly competitive wages, Mexico is enjoying a manufacturing boom, attracting billions of dollars in foreign investment from firms that are building factories to supply the North American market - a concept known as nearshoring.
Most recently, automakers Nissan, (Frankfurt Stock Exchange: NISA-FF) Audi, (Frankfurt Stock Exchange: NSU-FF) Honda (HMC) and Mazda (Frankfurt Stock Exchange: MZA-FF) have all announced plans to open plants in Mexico over the next few years.
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Gordon Hanson is director of the Center on Emerging and Pacific Economies and professor of economics at UC San Diego. He specializes in the economics of international trade, international migration, and foreign direct investment. He has published extensively in the top academic journals of the economics discipline, is widely cited for his research by scholars across the social sciences, and is frequently quoted in major media outlets. His current research examines the international migration of skilled labor, border enforcement and illegal immigration, the impact of imports from China on the US labor market, and the determinants of comparative advantage.
