Wednesday

The Rise and Fall of Industry: A Failure to Diversify



The students were divided into groups and given various topics to research and on which to prepare a class lecture/discussion. The video above was just a small part of group 1's presentation. Here's a summary of some of their research:

Yucatan's failure to diversify has caused severe swings in its economy. Henequen production, which started in the 1800s, was eventually consolidated down to a handful wealthy families until most of the plantations were taken over by the Mexican government in the early 1900's. Henequen plants were primarily used to make rope or bailing twine. We saw first hand a henequen hacienda a few days before the presentation. However, the demand for henequen and the competition from cheaper sources created a crash in the market for Mexican produced henequen.  Today, Mexico has tons of henequen plants growing, but no demand for the rope. Could re-creating a demand help?  Is that possible.

So, the Mexican government created the maquila system. In 1994, Nafta was drafted between the United States, Canada, and Mexico which stated that there would be no tax on material imported into Mexico. A maquiladora is a concept often referred to an operation that involves manufacturing in a country that is not the client's and as such has an interesting duty or tariff treatment. It normally requires a factory that may import materials and equipment on a duty free and tariff-free basis for assembly or manufacturing and then "re-exports" the assembled or manufactured product, sometimes back to the originating country. 

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