Maquiladora

Maquiladora refers to a manufacturing operation in which a foreign country’s factory imports raw materials and components on a duty-free or reduced-duty basis for assembly or processing, with the finished goods typically exported back to the country of origin or to another market. The term comes from the Spanish maquila, meaning to dock or to place under charge, reflecting the original practice of bringing in materials for processing.

Most maquiladoras are located near the U.S. border in Mexico, though similar export-oriented assembly facilities exist in Central America and the Caribbean. Their development began in the 1960s as a government program to attract foreign investment, create jobs, and promote exports. The regime typically allows temporary import of inputs under suspension of duties, with export requirements for finished products, and is coordinated with national trade and industrial policy, including modern regimes such as IMMEX in Mexico and related export-processing schemes.

Operations emphasize low-cost, often skilled, assembly and processing, with integrated supply chains involving multinational corporations. Common industries include electronics, automotive components, textiles, consumer electronics, and medical devices. Maquiladoras can range from simple assembly lines to highly automated plants, frequently located near suppliers and transport hubs.

Economic impact and issues: Maquiladoras have contributed to export-led growth and employment, but have also faced criticism for low wages, working conditions, environmental impact, and vulnerability to shifts in global demand. Policy debates focus on labor standards, income distribution, and the role of export processing zones in regional development.

Recent trends: The rise of nearshoring and trade agreements such as the USMCA influence the geography and investment in maquiladoras, with some shifts toward higher value-added production and enhanced regulatory compliance.