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MAQUILADORAS & DRUG TRAFFICKING IN MEXICAN
BORDER TOWNS
Melanie Sarkissian Phillip Zeller
Austeja VidugiryteMicah MalandAlex Pickett
Presenters:
Outline
General background of border towns in Mexico
Economic impact of maquiladoras Social impact of maquiladoras and drug
trafficking Economic impact of drug trafficking Impact of maquiladoras and drug
trafficking on the Mexican economy as a whole
Mexican Economy
Population ~ 111,211,789 GDP is $1,473 billion (2009) GDP by sector (2007 est.)
agriculture: 4% industry: 26.6% services: 69.5%
Export-oriented economy More than 90% of Mexican trade is under
free trade agreements with more than 40 countries
Chihuahua State
Chihuahua State
Chihuahua State
Largest state in Mexico Population ~ 3.2 million Represents 4.5% of Mexico's total GDP
(29,826 million USD) Strong focus on export oriented
manufacturing (maquiladoras) 329,939 people are employed in the
manufacturing sector (2005)
Juarez
The 1848 Treaty of Guadalupe Hidalgo established the Rio Grande as the border between Mexico and the US
Located in the Chihuahuan desert Population ~ 1.5 million Average annual growth rate from 1990-
2000 of 5.3% 15 of Mexico's largest banks
Juarez
Over 135,000 workers working at more than 320 maquila-related plants
Exports: electronic circuits, leather goods, textiles, printing machinery, medical supplies, automobile engines, etc.
Overall, represents one third of Mexico's exports to the U.S.
Ciudad Juarez & El Paso, Texas
Juárez El Paso population ~ 2 million
Largest border community
Expanding population of more than 5% a year
4 international ports of entry connecting Juarez to El Paso, Texas
Major point of entry and transportation for Mexico
Government--Mexico The PRI (Institutional Revolutionary Party)
held power in Mexico since 1929 1977--- electoral reforms 2000 --- Vicente Fox (PAN) elected
• 2006 --- Felipe Calderon (PAN)• Calderon made abating drug- trafficking one of the top priorities of his administration
Government--Chihuahua
Current governor is Jose Reyes Baeza
9 federal deputies 3 federal senators Hard for the
Juarez government to keep up with required services, leading to more crime
Urbanization Juarez is one of the fastest
growing in Mexico Immigration Investments in
maquiladoras From 1980 to 2000,
Ciudad Juarez's population grew by almost 1,000,000
People in search of better employment opportunities and higher standards of living
Large areas of slum housing
Maquiladoras
1960s---the Border Industrialization Program started promoting maquiladoras
1994---North American Free Trade Agreement (NAFTA)
• Favorable conditions for foreign capital • Factories now use more sophisticated production techniques and require more skilled labor
Maquiladoras & Employment
Before maquiladoras, border towns had highest unemployment rates in the country
Maquiladoras have become the leading industry in Ciudad Juárez
60% of all jobs in 2000 87% of the city's manufacturing jobs Majority of those employed are single
young women migrating from others states Many men in border states resent the
increasing presence of working females in public areas
ECONOMIC IMPACTS OF MAQUILADORA
INDUSTRY ON MEXICO’S BORDER TOWNS
Maquiladora Background
Factories on U.S. – Mexico Border
U.S. Inputs Cheap Mexican
Labor Shipped back to
West (i.e. USA)
NAFTA Background
NAFTA signed 1994 Opened trade
barriers Maquiladora growth
attributed to NAFTA Agreement led to
easier trade
Theory
Maquiladoras be mutually benefit border Increase in exports Decrease in labor cost for importer
Capitalizing upon competitive advantages => efficiency
The Downfall of Maquiladora Style Liberalizatoin
Sharp growth in maquiladoras during the 1990s proved unsustainable After October 2002, there was a 21%
unemployment increase in the maquiladora industry.
Sluggish growth wreaked havoc on border-town economies, as their success was often tied to exports of maquiladora created goods.
Intended Result of Maquiladoras
The program was meant to establish and foster trade and investment in cities along the border. Maquiladoras viewed as de facto subordinates
of the U.S. economy Most goods are intended to be sold to the U.S.
and other developed Western economies
Theoretical Basis
Industrialized nations should experience an increase in income inequality through trade liberalization
This is purely a function of trade liberalization increasing returns to capital and decreasing returns to labor This is experienced because industrialized
nations are generally capital abundant as compared to labor
Theoretical Basis – Cont’d
On the flipside, in less industrialized countries, where there is labor abundance and relatively low levels of capital we see a different story
Increasing returns to labor due to liberalization
Decreasing returns to capital experienced by liberalization decreases income inequality
Impact on local level
Multinational corporations that participate in foreign direct investment typically pay higher wages than local companies
Foreign direct investment by multinationals often leads to an increase in wages for skilled workers versus unskilled workers, leading to income inequality
Effect of Maquiladora Industry
Plan
ts
Empl
oym
ent
(thou
sand
s)
Impo
rted
Raw M
ater
ials (B
illio
ns)
Domes
tic M
ater
ials
(Bill
ions
)
Tota
l Raw
Mat
eria
ls (B
illio
ns)
Value
add
ed (b
illio
ns)
Expo
rts (b
illio
ns)
3590
1285
54 2 55 18 79
3270
1122
43 1 44 12 60
Year 2000 Year1999
Social Impact of Maquiladoras and Drug
Trafficking on Chihuahua State
Murders in Chihuahua State
Over 400 killed since 1993 Mainly in the city of Juarez but has spread
to around the state Most women are Maquiladora workers Women activist movements have deemed
it “femicide:” the mass murder of women simply because they are women
A bigger problem:
It is not just about these women being killed It is an economic, social and cultural problem “The men who are doing this have political
and economic power and know that nothing will happen to them for doing these things.”
Alma Gomez - lawyer representing victims’ families co-founder Justicia Para Nuestras Hijas
“From corruption and drug trafficking to the foreign owned companies, these menhave no regards for these women’s lives.”
Lucha Castro – lawyer representing victims’ families co-founder Justicia Para Nuestras Hijas
Description of Murders
Most women have been found with similar murder descriptions:
- Raped (sometimes by numerous men) - Tortured in various ways - Strangled or stabbed - Bodies discarded in the desert
Families Reaction
Until 2005 there was a 72 hour mandatory waiting period after the report was filed until the start of the investigation
Most victims’ families are poor with little influence over authorities to investigate the crimes
Many have started grouping together and creating marches, singing songs and painting pink crosses around the community as the official symbol
Many family members who cause too much of a stir have been found killed themselves
Symbol representing murders in Juarez
Maquiladoras
70 percent of maquiladora workers are women
Majority of women are abducted on their way home for maquiladoras
Some companies provide busses home but only at certain hours and drop off points are far from homes
Maquiladoras Conditions
Very poor working conditions: No protective devices No unions Psychological abuse from line manger Inhalation of fumes – no ventilation 16 hour days High injury rate without medical attention
Who is responsible?
Investigators believe many of the killings are done by men associated with drug cartels
Some are done to “celebrate” a successful run
"Sometimes, when you cross a shipment of drugs to the United States, adrenaline is so high that you want to celebrate by killing women.”
Former drug cartel member
Who is responsible?
Some believe it is a combination of people who just have no regard for women’s lives:
- Drug cartel members - Police Officers - Serial Killers - Copy-cats
Drug Cartels
The size of the Mexican drug trade is estimated to be at least $30 billion US a year
Juarez has become a potent symbol for Mexico’s escalating drug wars
The ongoing drug gang warfare in Juarez leads to more than 500 killings a year
American’s Influence
Estimates say 90 percent of drugs that pass through Mexico go to the US Approximately 65% of all cocaine smuggled in
the US enters via Mexico
Police Involvement
Officials believe at least 20 officers in Chihuahua state and Juarez police departments double as enforcers and traffickers for the Juarez drug cartel
2005 reports released by a Federal Prosecutor appointed by the Mexico’s President confirms police involvement
Some police officers are bribed by drug traffickers Drug cartels spend about 10% of their gross
yearly income (over US $3 billion) on bribes
Police Involvement
Although Mexico has signed international anti-torture laws they do not follow them
Police try to find men, arrest them and torture them until they confess to the crimes
Once they find someone to blame, even if unjust, they consider the case closed and the investigation finished
The Battle
“Whether justice can be found in Ciudad Juarez has
become an important test of Mexico's efforts to establish a rule of law, human rights
and law enforcement.”Mexican authorities
ECONOMIC IMPACT OF DRUG TRAFFICKING
Rise of Mexican Cartels
US Prohibition Columbia’s Diminished Role in Drug
Smuggling Demise of Columbian Cartels, Medellin
and Cali 1989: Closing Trafficking Route in Florida
Mexican Cartels
7 Cartels: 3 Major Gulf Cartel (21 States)
Eastern US-Mexico Border, down the gulf coast
Simaloa (17 States) Juarez (13 States)
Smuggle cocaine down Western part of border
Alliances
Tiajuana and Gulf “Federation”
Simaloa Juarez Valencia
Operations
Mexican Cartels - wholesale distribution Street Gangs - retailing Utilize approximately 200,000-300,000 employees Some involved in transportation, security, banking, and
communications industries
Statistics
70% of cocaine, 30% of heroin, 80% of marijuana enter the US through Mexico (US State Department)
Earn $27-$30 billion in revenue, $7 billion in profits
Wholesale estimates are $13.6-$48.4 billion
Smuggle $8.3-$24.9 billion into Mexico for laundering.
Government Response
24,000 soldiers and police to 9 states Increase salaries of troops in anti-cartel
50% “Platform Mexico” initiative to improve
exchange of information
US Assistance
“Interdiction and eradication” International Narcotics Control and Law
Enforcement (INCLE) $27.8 million to Mexico 35% of budget to border security
Benefits and Externalities Benefits
Employment Cash flows Investment
Negative Externalities Corruption Violence Productivity losses Increased demand
Impact of Maquiladoras on Mexico’s GDP
•Correspondence with NAFTA• Exports grew 16% annually thanks to VAT of Maquiladora’s (‘95-’96)
Border-Town Maquiladoras & Mexican Employment
Helped in offsetting weak national job creation
70% of Maquiladora production; 62% of employment
Unemployed Mexicans are provided employment
Employment within Mexico—Highlighting Drug Industry• Just under 90% of illegal drug trade operates within border towns=> 421,200 employed in drug trade along border towns
Cost-Benefit of Drug-Trade Industry
• Drastic impact on tourism economics• Decreasing profit gap within the industry• Extortion of local businesses• $200 million loss over past year in tourism industry alone; 5% decrease annually over past 3 years• Cartels profit; nation suffers
Border-Towns:Focal Points of Billion Dollar Industry
Current Action
Various organizations throughout America have taken action to education people about the murders
Various celebrities have gone to the Mexican president to urge him to do more to stop the killings
Numerous human rights organizations have done protests and forced pressure on authorities to do more to solve the problem
American’s Influence
“The US cannot just sit and enjoy the drugs, they are
causing the misery of thousands of people.”
Charles Bowden – Author, “Juarez: the Laboratory of Our Future”
Sources: http://www.learner.org/workshops/geography/maps/el-paso-locator.jpg http://www.time.com/time/covers/1101010611/fcities2.html http://www.dallasfed.org/research/border/tbe_vargas.html http://www.plannersnetwork.org/publications/2006_Spring/vasquez.html http://findarticles.com/p/articles/mi_m5092/is_n10_v16/ai_12797895/ http://next.eller.arizona.edu/courses/InternationalManageme
nt/Fall2006/student_papers/final_papers/ABSTRACT3x.pdf http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1253690/ http://www.awid.org/eng/Issues-and-Analysis/Library/What-is-the-connection-b
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2000 Nathan M. Jensen and Guillermo Rosas International Organization, Vol. 61, No. 3 (Summer, 2007), pp. 467-487 Published by: Cambridge University Press on behalf of the
International Organization Foundation
On The Edge: The Femicide in Ciudad Juarez. Prod. Steev Hise. Illegal Art, Women Make Films, 2006.
No Angel Came. 15 Apr. 2010 http://takenbythesky.net/juarez/jindex.html Corchado, Alfredo . “Suspicion of Police Ties in Juarez Killings Mount.” The
Dallas Morning News. March 2004. 15 Apr. 2010 <TheState.com>
Sources: Andreas, Peter. "The Political Economy of Narco-Corruption in Mexico." Current History (1998): 160-65. Chabat, Jorge. "Mexico's War on Drugs: No Margin for Maneuver." Annals of the American Academy of Political
and Social Science 582 (2002): 134-48. Paternostro, Silvana. "Mexico as a Narco-Democracy." World Policy Journal 12.1 (1995): 41-47. Recio, Gabriela. "Drugs and Alcohol: US Prohibition and the Origins of the Drug Trade in Mexico, 1910-1930."
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• From the Economic Policy Institute; A journal examining the impact of corporate globalization on communities: http://www.ratical.org/co-globalize/NAFTA@7/mx.html
• Mexico's National Institute of Statistics and Geography; 2007 Economic census: http://www.inegi.org.mx/inegi/default.aspx • Journal: "Evaluating the economic impact of drug traffic in Mexico"; Harvard University's Department of
Government; Viridiana Rios; www-old.gov.harvard.edu/student/rios/MexicanDrugMarket_Riosv2.doc+Evaluating+the+economic+impact+of+drug+traffic+in+Mexico&cd=1&hl=en&ct=clnk&gl=us&client=safari