MULTINATIONALS IN MEXICO.   Term Paper ID:26171 Click to get this paper

Essay Subject: Positive & negative effects of global corps. on Mexican economy, examples (General Motors, Grupo Pulsar), NAFTA.... More...

7 Pages / 1575 Words 5 sources, 6 Citations, MLA Format $28.00 Return to List of Papers

Paper Abstract: Positive & negative effects of global corps. on Mexican economy, examples (General Motors, Grupo Pulsar), NAFTA. Paper Introduction: Mexico since the advent of the North American Free Trade Agreement has improved is economic picture and shifted its political orientation to a degree. Multinational investment has been part of this change, and multinationals can be seen as both benefiting Mexico and yet contributing to economic stagnation in some respects. Many multinationals take advantage of Mexico's relatively cheap labor market, for instance, and so tend to keep wages low. NAFTA can be seen as part of a new effort at globalization as trade barriers are removed and more and more companies become multinational in orientation. Trade openings pose a problem for countries like Mexico interested in introducing reform while dedicated to not losing the capitalist base they have already achieved. Emphasis has been placed on the need to change regulation of foreign investment in order to incre Text of the Paper: The entire text of the paper is shown below. However, the text is somewhat scrambled. We want to give you as much information as we possibly can about our papers and essays, but we cannot give them away for free. In the text below you will find that while disordered, many of the phrases are essentially intact. From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper. The industrial sector saw agrowth of 9.3 percent in 1997, and this dragged some other sectors along;however, most of the productive system, especially agriculture, remained atlevels below those registered before the crisis in 1994. However, this reduced output from GM did not halt thesteady growth in automobile production in the first half of the year, andstatistics published by the Asociacion Mexicana de la Industria Automotriz(AMIA) indicate that more than 729, motor vehicles were assembled inMexico in January-June, an increase of 11.6% relative to the first half of1997. Volkswagen de Mexico introduced new models this year and so helpedcompensate for the slowdown at GM. Nhumoproduces raw materials for the tire industry and belongs to Grupo Desc,which is one of Mexico's most successful conglomerates and most aggressiveexporters. It has tied its futuregrowth on ag-biotech projects. market and otherdestinations in 1997. Wayne Cornelius, political scientist and research director of thecenter for U.S.-Mexican Studies at the University of California at SanDiego, sees this program as beneficial and as a model program not only forChiapas but for other parts of the country where the employment base inagriculture has been stagnant or shrinking for many years (Smith D1). Thecompany had been planning to purchase about $1.3 billion in auto parts fromabout 2 Mexican suppliers this year, and this plan could be affected bythe slowdown (Latin America DataBase). market.Economists said they expected a sharp reduction in exports from the Silaoand Ramos Arizpe plants to widen Mexico's trade deficit during June andJuly 1998. GM published a report early in July sayingthat production in Mexico, the United States, and Canada during Junetotaled only 237, units, or roughly half the number produced in June1997. The effect of globalization and multinational corporations is seentoday across Latin America, and the change has been having a beneficialeffect in Mexico. The strike was not responsible for all of the recent decline inautomobile exports, however, and exports from otherautomobile companies, such as Nissan de Mexico and Ford deMexico, also declined during the second quarter of this 1998. Because of a lack of partsfrom the Michigan plants, GM suspended purchases of complementarycomponents from GM's Mexican-based subsidiary Delphi Automotive and fromindependent suppliers like Condumex and Grupo Saltillo (GISSA). Works CitedCevallos, Diego. Multinationals therefore have both a positive and a negative effect.Overall, they have contributed to the economic growth in Mexico, andMexican multinationals in particular are serving Mexican interests well. The automotive sector is projected to grow by only 18 or 19percent in the second quarter of this year, which would be a decline ofmore than 1 percentage points from a growth rate of more than 31 percentover the same period in 1997. The focus of the company hasbeen shifted from tobacco to fruit and vegetables, and ELM today isengaging 8 more partners in Chiapas to farm papaya, melons, chile,eucalyptus trees and bamboo. The wideningtrade balance is one reason for concern, but some analysts said that thegreatest impact of the GM strike might be seen in statistics for industrialproduction. Multinational investment has been part of this change, andmultinationals can be seen as both benefiting Mexico and yet contributingto economic stagnation in some respects. Including full-time employees of ELM subsidiarieshere and seasonal workers hired to assist the farmer partners, Pulsar hascreated more than 15, jobs in Chiapas. Grupo Pulsar is based in the northern city of Monterrey and is one ofMexico's few genuinely multinational corporations. Mexico since the advent of the North American Free Trade Agreement hasimproved is economic picture and shifted its political orientation to adegree. Emphasis hasbeen placed on the need to change regulation of foreign investment in orderto increase Mexico's attraction to multinational enterprises, and to agreat degree this has been accomplished. Continuedgrowth of more than 5 percent this year and next has been predicted("Mexico"). There was aslight fall in unemployment, but salaries are still 2 percent down from1994 levels. This move was counter to that of rebel groups in thearea, and violence has continued as negotiations have stalled between thegovernment and the rebels over land reform and other issues. ELM is now recruiting ordinary villagefarmers in poor communities and training them to become entrepreneurs backin their hometowns, showing them how to use their own small family fieldsin a dramatically different way (Smith D1). Reliance on multinationals,however, can create problems when those multinational companies investingin Mexico experience problems elsewhere, as was recently true with GeneralMotors. 'Third World' Multinational Are Marching in Step with Globalization." World Paper (February 17, 1998).Smith, James F. Pulsar's agribusiness subsidiary, EmpresasLa Moderna (ELM), includes Seminis, the world's largest producer of fruitand vegetable seeds, based in Saticoy, California. Many multinationals takeadvantage of Mexico's relatively cheap labor market, for instance, and sotend to keep wages low. NAFTA can be seen as part of a new effort atglobalization as trade barriers are removed and more and more companiesbecome multinational in orientation. Initiatives such asthis reward peasant farmers fairly and draw them into the formal economy,and it is believed that this will help Mexico to achieve sustained economicgrowth. A team of Bulgarian, Cuban and Mexicanscientists are working on new genetic strains of vegetables, developing"friendly insects" to attack pests with less insecticide, and pursuingother agricultural productivity projects. The company has othersubsidiaries working in exotic ag-biotech areas such as germ plasm andgenomics. Tijuana today is the television production capital ofthe world because of this trend. In 1997, Mexico experienced economic growth of 7 percent, the highestrate since 1981, yet this as seen as insufficient to overcome theunderlying problems. North American production for the second quarter of the year was1.17 million cars and trucks, compared with 1.45 million in April-June1997, showing a decline overall that has affected assembly of units inMexico as elsewhere. market. The structures involves "agri-associations" of up to 2 or so partners, each growing tomatoes, chilies,melons, and other fruits and vegetables, as well as bamboo and tobacco.The partners and ELM split the profits (Smith D1). More recently, it was noted that Mexico's real GDPdid not return to its pre-devaluation level until mid-1997, and even then,real average wages were 2 percent below their 1994 level. Mexican President Zedillo recentlyawarded two Mexican multinational corporations for their efforts. The UAW strike caused layoffs of several thousandworkers at the Coahuila and Guanajuato plants in Mexico and significantlyaffected the Silao plant, which depends heavily on parts from the Michiganplants to assemble passenger cars and trucks, primarily for export to theU.S. The company was also faced with the possibility ofhaving to shut down the Ramos Arizpe plant entirely if the strike were notresolved quickly, and at the time only maintenance workers and othernonassembly personnel were working at the Ramos Arizpe plant, which alsoexports a large percentage of its production to the U.S. The GM slowdown is still expected tohave a negative impact on the economy and an indirect impact on relatedsectors of the economy, such as auto parts. Cemex has been praised as themost admired venture in the commercial sector of the national economy andin terms of corporate culture, high growth potential, accounting standards,logistics, and profitability, Cemex ranks alongside the General Electric,Compaq, Sony, and other major multinational corporations (Salinas-Leon). An examination of the climate today shows how multinationalsoperate in Mexico and how well they serve Mexican economic interests. The Silao facility assembles popular GM models like theSuburban and the Silverado, and itexported more than 12 , vehicles to the U.S. Thecompany has not just hired workers to tend the plantations but has insteadcreated more than 2,3 farmer partners in Chiapas since the early 199 s,nearly all of them working with the original primary crop, tobacco.Another 8 farmer partners are joining this year, and all are growingfruits and vegetables. Trade openings pose a problem forcountries like Mexico interested in introducing reform while dedicated tonot losing the capitalist base they have already achieved. General Motors has several plants in Mexico producing different autoparts and assembling vehicles. One multinational company operating in Mexico is changing the wayagriculture is done in that country. Economists projected Mexico's trade deficit at $4 millionduring June, partly as a result of the GM strike, and believed the deficitcould widen further to $2 million in July if the strike continued (LatinAmerica DataBase). Mexico: The Trials of Record Economic Growth." Inter Press Service English News Wire (February 19, 1998).Latin America Database. Grupo Pulsar undertook its program inMexico as a result of the 1992 land-reform measures allowing peasantfarmers to own the land they work--a historic free-market shift in Mexico'sland-use policy. Mexican income currently stands at a level a thousand percentlower than that of the United States and 73.4 percent lower than Mexico 11years ago (Cevallos). Another effort has been launched by the company to improve thefarmers' growing techniques and productivity at NAFTA's only humid-tropicsresearch laboratory for ag-biotech, located outside the steaming town ofTapachula near the Pacific Coast. These plants were recently affected by a GMstrike in Michigan, showing the interconnectedness of different economiesin the current climate. analysts stated that what was required was at least adecade of sustained growth of more than four percent per year for theprevailing of poverty to begin to be overcome. Chiapas is a prized field laboratory for this work because ofits wide variety of climates--the region includes the only tropical rainforest within the North American Free Trade Agreement territory. Cementos de Oriente is a subsidiary of Cemex, a cement makerwhose reach now extends into the United States, Colombia, the Philippines,Spain, the Caribbean, and Central America. "Biotech Farmers in Chiapas Lead Peaceful Agricultural Revolution." Los Angeles Times (July 26, 1998), D-1. "Strike at General Motors Plants in Michigan Forces Curtailment of Operations at Coahuila and Guanajuato Plants." SourceMex: Economic News & Analysis on Mexico (July 15, 1998)."Mexico." The Economist (February 21, 1998).Salinas-Leon, Roberto. Economicstagnation has been one consequence, but the agriculture project hasproceeded just the same, creating high-tech partnerships with small farmersworking their own land and then splitting the profit. If this paper is not what you are looking for, you can search again: Search for: or Click here to request an essay written just for you.