Mexico Local Producers in GVC the Challenge of Standards and Certification

Saturday, June 25, 2016: 4:15 PM-5:45 PM
83 Dwinelle (Dwinelle Hall)
Clemente Ruiz Duran, Universidad Nacional Autonoma de Mexico, Mexico, Mexico
Mexico local producers in GVC: the challenge of standards and certification

Clemente Ruiz Durán and Moisés Portillo

 

The hypothesis of this paper is that there has been a general upgrading among local producers, but for them to remain competitive requires a further adoption of standards and certification, that is linked to training at local level and it requires local authorities to develop programs for that purpose.  Mexico’s automotive industry has been successful in developing productive linkages among regions inside the country, helped by its insertion to this global value chain: around 54 thousand economic units and more than one million workers participate in the process of producing a vehicle, from the transformation of the primary inputs, to the distribution logistics to get it into the hands of the domestic consumers or place it on foreign markets. This has been, to a large extend, due to the significant supply networks created in the value chain, where more than 1,200 auto parts producers have played a significant role in consolidating these linkages and supporting the terminal industry. 

This paper aims to explore the regional differences in the process of development of productive linkages inside the automotive value chain in Mexico, under the hypothesis that greater specialization on economic activities that are linked to dynamic global markets –such as those of the automobile industry– can help regions to boost their economic performance, in terms of value added generation, employment and investment.

For that purpose, it will be identified –at a municipal level– the location of production at each phase of the automotive value chain, based on value added generation accounted in economic census data for years 2003 and 2013. After mapping the multiple activities involved in the production of a vehicle –a total of 44 classes, in accordance with the North American Industrial Classification System (NAICS)–, they will be grouped into phases or stages, in order to analyze differences in value added contribution to the final product. Regional economic performance differences derived from the development of linkages will be analyzed not only in terms of the phase of the value chain in which the region is specialized, but also considering the dynamic role of the region inside the chain, making a distinction of regions that gained (or maintained) specialization during the period, from those that are no longer specialized.

Finally, given that this industry in Mexico has succeeded in linking to the world market under the principles of openness and globalization, incorporation processes at these economic activities will be analyzed in order to identify the stages of the value chain where support may be needed in order to maintain competitiveness.