The neoliberal mirage of nearshoring in Mexico

We were sold the narrative of nearshoring, the relocation of multinational companies that are moving their factory plants from Asia to the Mexican border, as the definitive economic miracle that would turn the north of the country into the new Silicon Valley.

However, a tour of the industrial parks of Nuevo León and Coahuila reveals a considerably grimmer reality: 40% of border municipalities suffer severe water shortages, while the Federal Electricity Commission (CFE) is operating at the limit of its capacity to supply power to the new industrial warehouses.

Transnational corporations are arriving attracted by their proximity to the United States, but they demand that the Mexican state finance water and electricity infrastructure projects while they enjoy tax exemptions and pay maquila wages that barely cover the basic consumer basket.

Celebrating the increase in foreign capital inflows without demanding social counterparts is repeating the old mistakes of the assembler model. If the new industrial plants consume the water reserves of local communities without generating value chains with domestic suppliers or substantially raising the real wages of workers, the net benefit for the country will be practically nil.

To keep nearshoring from becoming a new version of the maquila enclave of the last century, the Mexican government should not act as an obliging host to private multinationals.

It is essential to impose strict social conditionalities, require technology transfer to domestic suppliers, collect the corresponding taxes to finance public water infrastructure, and ensure that the inflow of capital translates into decent wages and balanced development for all regions of the Republic.

Sources: National Water Commission (CONAGUA) (https://www.gob.mx/conagua) | National Institute of Statistics and Geography (INEGI) (https://www.inegi.org.mx)