Archive for the ‘Mexico’ Category

Understanding Mexico’s Economic Underperformance

August 2, 2012 Comments off

Understanding Mexico’s Economic Underperformance (PDF)
Source: Migration Policy Institute

Despite major economic reforms, fiscal discipline, privatization of state-owned enterprise, and strong growth in foreign trade and investment during recent decades, Mexico has underperformed economically relative to comparably situated nations. The report presents four arguments as to why Mexico has not sustained higher rates of economic growth: poorly functioning credit markets that inhibit long-term growth; unbalanced incentives toward informality in the labor market; inefficient regulation that diminishes the country’s comparative industrial advantage; and international competition, especially with China, which undermines export strength. The author offers policymakers a road map to expand economic opportunities.

Presentation Videos — Bridging the Border: Reinforcing Ties between the U.S. and Mexico – April 12, 2012

July 5, 2012 Comments off

Bridging the Border: Reinforcing Ties between the U.S. and Mexico – April 12, 2012
Source: Federal Reserve Bank of Atlanta

The April 12 panel, moderated by Atlanta Fed President and CEO Dennis P. Lockhart, explored the long-standing relationship between the United States and Mexico, two countries bound by history, geography, and trade.

Mexico has experienced a decade of relative stability, thanks to a series of fiscal and monetary reforms, explained Ed Skelton, a business economist at the Dallas Fed. Those reforms include central bank independence, fiscal discipline, and the adoption of a formal inflation target.

The country’s electoral system has also undergone extensive reforms, making it one of the most impartial systems in the world, said Robert Pastor, director of American University’s Center for North American Studies. Pastor argued that it is time for the United States, Canada, and Mexico to refocus on the hemisphere, where trade relations have stalled since 2001.

Strengthening State Capabilities: The Role of Financial Incentives in the Call to Public Service

June 21, 2012 Comments off

Strengthening State Capabilities: The Role of Financial Incentives in the Call to Public Service

Source: National Bureau of Economic Research

We study a recent recruitment drive for public sector positions in Mexico. Different salaries were announced randomly across recruitment sites, and job offers were subsequently randomized. Screening relied on exams designed to measure applicants’ intellectual ability, personality, and motivation. This allows the first experimental estimates of (i) the role of financial incentives in attracting a larger and more qualified pool of applicants, (ii) the elasticity of the labor supply facing the employer, and (iii) the role of job attributes (distance, attractiveness of the municipal environment) in helping fill vacancies, as well as the role of wages in helping fill positions in less attractive municipalities. A theoretical model guides each stage of the empirical inquiry. We find that higher wages attract more able applicants as measured by their IQ, personality, and proclivity towards public sector work – i.e., we find no evidence of adverse selection effects on motivation; higher wage offers also increased acceptance rates, implying a labor supply elasticity of around 2 and some degree of monopsony power. Distance and worse municipal characteristics strongly decrease acceptance rates but higher wages help bridge the recruitment gap in worse municipalities.

+ Full Paper (PDF)

CRS — Mexico’s 2012 Elections

June 5, 2012 Comments off

Mexico’s 2012 Elections (PDF)
Source: Congressional Research Service (via Federation of American Scientists)

Given the close and complex relationship that the United States has with neighboring Mexico, the results of the July 1, 2012 Mexican presidential and legislative elections are of interest to U.S. policy makers. As Mexico does not allow consecutive reelection for any office, the results of these elections could lead to significant changes in the country’s political landscape and the Mexican government’s approach to aspects of its relations with the United States. The top issues being debated in the Mexican presidential campaign—security, economic policy, and energy sector reform—are of crucial importance to Mexico’s future and are of keen interest to Congress. The policies adopted by the next Mexican President will likely have implications for U.S.- Mexican security cooperation, prospects for deeper North American economic integration, and U.S. energy security. The legislative elections are equally crucial, as they will likely determine how easily the next Mexican administration will be able to advance its agenda through congress.

Most analysts are predicting that the Institutional Revolutionary Party (PRI) will retake the presidency after 12 years of rule by the conservative National Action Party (PAN). The PRI could also capture a majority in the Chamber of Deputies, a feat not accomplished by a single party since 1994. Observers maintain that Mexico’s security challenges and continuing poverty have left Mexicans disappointed with the PAN and nostalgic for the order and stability they remember under the PRI, despite the party’s past reputation for corruption and undemocratic practices. Moreover, while U.S.-Mexican security cooperation has intensified and U.S.-Mexican economic integration has deepened under the current PAN administration of Felipe Calderón, the fruits of bilateral efforts have not always been apparent to average Mexican voters.

Against this backdrop, the polls have been remarkably stable since even before the campaign officially began on March 30, 2012. A majority of voters have consistently expressed support for PRI candidates for the Chamber of Deputies and PRI presidential candidate Enrique Peña Nieto, a former governor of the state of Mexico. Peña Nieto, running in a coalition with the Green Ecological Party (PVEM), has maintained a double-digit lead over his opponents. Roughly 20% of the electorate remains undecided, however, and constitutes a bloc of voters large enough potentially to tip the election toward either Josefina Vázquez Mota, a former Minister of Education standing for the PAN, or Andrés Manuel Lopez Obrador, a former mayor of Mexico City representing a leftist coalition led by the Party of the Democratic Revolution (PRD). Gabriel Quadri, an environmentalist standing for the small National Alliance Party (PANAL) that is aligned with the Mexican teacher’s union, has trailed far behind in the polls.

This report provides an overview of the parties and candidates competing in the Mexican federal elections, with a focus on the presidential contest, followed by a discussion of key issues in the campaign that could have implications for U.S.-Mexican relations. It will be updated. For background information on Mexico and U.S.-Mexican relations, see: CRS Report RL32724, Mexico: Issues for Congress, by Clare Ribando Seelke and CRS Report RL32934, U.S.-Mexico Economic Relations: Trends, Issues, and Implications, by M. Angeles Villarreal.

The Three Amigos: How Income Inequality in Mexico is different than Canada and the U.S.

May 31, 2012 Comments off

The Three Amigos: How Income Inequality in Mexico is different than Canada and the U.S.
Source: Canadian Centre for Policy Alternatives

An examination of income inequality in North America reveals that Mexico is the only part of the continent where the middle class has been gaining from growth, according to a new study by internationally respected economist Lars Osberg, Dalhousie University professor and CCPA Research Associate.

Mexico’s middle class has benefited from urbanization, greater female employment, improved education and better social programs. Although similar trends in Canada and the U.S. maintained growth in middle class incomes until the 1970s, Osberg says, they have since run out of steam. Globalization, technological advances, a drop in unionized work, and a deregulated labour market have contributed to stagnant real incomes for most in Canada and the U.S. since the 1980s.

Meanwhile, income growth at the top has accelerated in both Canada and the U.S.

Adult Awareness of Tobacco Advertising, Promotion, and Sponsorship — 14 Countries

May 28, 2012 Comments off

Adult Awareness of Tobacco Advertising, Promotion, and Sponsorship — 14 Countries
Source: Morbidity and Mortality Weekly Report (CDC)

According to the 2012 Report of the U.S. Surgeon General, exposure to tobacco advertising, promotion, and sponsorship (TAPS) is associated with the initiation and continuation of smoking among young persons. The World Health Organization (WHO) Framework Convention on Tobacco Control (FCTC) requires countries to prohibit all forms of TAPS (2); the United States signed the agreement in 2004, but the action has not yet been ratified. Many countries have adopted partial bans covering direct advertising in traditional media channels; however, few countries have adopted comprehensive bans on all types of direct and indirect marketing. To assess progress toward elimination of TAPS and the level of awareness of TAPS among persons aged ≥15 years, CDC used data from the Global Adult Tobacco Survey (GATS) collected in 14 countries during 2008–2010. Awareness of any TAPS ranged from 12.4% in Turkey to 70.4% in the Philippines. In the four countries where awareness of TAPs was ≤15%, three of the countries had comprehensive bans covering all nine channels assessed by GATS, and the fourth country banned seven of the nine channels. In 12 countries, more persons were aware of advertising in stores than advertising via any other channel. Reducing exposure to TAPS is important to prevent initiation of tobacco use by youths and young adults and to help smokers quit.

The Under-Registration of Births in Mexico: Consequences for Children, Adults, and Migrants

May 3, 2012 Comments off

The Under-Registration of Births in Mexico: Consequences for Children, Adults, and Migrants
Source:  Migration Policy Institute

The United Nations Children’s Fund estimates that approximately 41 percent of all births each year in the developing world (excluding China) go unregistered, denying the rights of over 50 million children to an official identity, name, and nationality. These invisible children lack access to basic social services and are susceptible to a number of dangers

In Latin America and the Caribbean, at least 2 million of the 11 million babies born every year will never be registered. More than 7 million people in Mexico currently lack a birth certificate, according to a recent statement by Carlos Anaya Montero of the National Registry of Population. Due to a lack of an official government-led study, nongovernmental organizations and demographers have estimated the unregistered population in Mexico — especially with respect to children — variously (and with some degree of uncertainty). The Child Rights Information Network, for example, has found that as many as 30 percent of children under the age of 5 are unregistered and practically invisible to the eyes of the Mexican government.

The under-registration of births in Mexico results in the denial of children’s access to education, health care, and legal protection and renders them vulnerable to organized crime, human trafficking, and unscrupulous employers. When unregistered children become adults, they face additional economic hardships and consequences for their civic engagement. There is also anecdotal evidence that disenfranchisement due to nonregistration can lead people who have no formal education and few employment prospects to illegally immigrate to the more opportunity-rich United States, but confront additional challenges there of being stateless.

The 2012 Mexican Presidential Election and Mexican Immigrants of Voting Age in the United States

May 2, 2012 Comments off

The 2012 Mexican Presidential Election and Mexican Immigrants of Voting Age in the United States
Source: Migration Policy Institute

An estimated 11.9 million Mexican citizens resided outside of Mexico in 2010, primarily in the United States, but also in Canada, Spain, Bolivia, Germany, Guatemala, and countries throughout the rest of the world. According to World Bank estimates, Mexican citizens sent home over US$257 billion in remittances between 1990 and 2010, contributing to the national economy and helping their families, friends, and other networks cope during times of economic hardship.

Given its large size and financial contribution to the country throughout the years, Mexico’s diaspora began pressuring the Mexican government to allow them to participate in the country’s political decision-making process in the 1990s. In 2005, Mexicans living abroad were granted voting privileges for presidential elections taking place in their country of origin, and they voted for the first time during the 2006 presidential election.

This summer, the Mexican diaspora will once again have the opportunity to vote for the Mexican president. In order to vote in the election, scheduled for July 1, 2012, a person must be a Mexican citizen (either by birth or naturalization), be at least 18 years of age, be registered on the Federal Electoral Institute’s (IFE) Federal Registry of Voters, and have a valid voting ID card (credencial electoral).

This article discusses the history and process of external voting in Mexico, the participation of the Mexican diaspora in the 2006 Mexican presidential election, and the prospects for participation in the 2012 election. Utilizing the most recently available data from the US Census Bureau, the article then goes on to explore the size, geographical distribution, and characteristics of voting-age members of the Mexican diaspora in the United States.

Net Migration from Mexico Falls to Zero—and Perhaps Less

April 23, 2012 Comments off

Net Migration from Mexico Falls to Zero—and Perhaps LessSource: Pew Hispanic Center

The largest wave of immigration in history from a single country to the United States has come to a standstill. After four decades that brought 12 million current immigrants—more than half of whom came illegally—the net migration flow from Mexico to the United States has stopped—and may have reversed, according to a new analysis by the Pew Hispanic Center of multiple government data sets from both countries.

The standstill appears to be the result of many factors, including the weakened U.S. job and housing construction markets, heightened border enforcement, a rise in deportations, the growing dangers associated with illegal border crossings, the long-term decline in Mexico’s birth rates and changing economic conditions in Mexico.

The report is based on the Center’s analysis of data from five different Mexican government sources and four U.S. government sources. The Mexican data come from the Mexican Decennial Censuses (Censos de Población y Vivienda), the Mexican Population Counts (Conteos de Población y Vivienda), the National Survey of Demographic Dynamics (Encuesta Nacional de la Dinámica Demográfica or ENADID), the National Survey of Occupation and Employment (Encuesta Nacional de Ocupación y Empleo or ENOE), and the Survey on Migration at the Northern Border of Mexico (Encuesta sobre Migración en la Frontera Norte de México or EMIF-Norte). The U.S. data come from the 2010 Census, the American Community Survey, the Current Population Survey and the U.S. Department of Homeland Security.

+ Full Report (PDF)

The Development and Fiscal Effects of Emigration on Mexico

April 14, 2012 Comments off
Source:  Migration Policy Institute

The economic consequences of emigration on migrants’ countries of origin have long been studied, yet the precise assessment of positive and negative impacts remains complex. This analysis finds that when the labor market effects and household income benefits of remittances are compiled into a model of the Mexican economy, Mexico’s fiscal balance appears to benefit from emigration – its GDP rising by 8.8 percent and tax collection by 7.4 percent.

CRS — Border Security: Immigration Enforcement Between Ports of Entry

February 7, 2012 Comments off

Border Security: Immigration Enforcement Between Ports of Entry (PDF)
Source: Congressional Research Service (via Federation of American Scientists)

Border enforcement is a core element of the Department of Homeland Security’s (DHS’s) effort to control illegal migration, with the U.S. Border Patrol (USBP) within the Bureau of Customs and Border Protection (CBP) as the lead agency along most of the border. Border enforcement has been an ongoing subject of congressional interest since the 1970s, when illegal immigration to the United States first registered as a serious national problem; and border security has received additional attention in the decade following the terrorist attacks of 2001.

Since the 1990s, migration control at the border has been guided by a strategy of “prevention through deterrence”—the idea that the concentration of personnel, infrastructure, and surveillance technology along heavily trafficked regions of the border will discourage unauthorized aliens from attempting to enter the United States. Since 2005, CBP has attempted to discourage repeat entries and disrupt migrant smuggling networks by imposing tougher penalties against certain unauthorized aliens, a set of policies known as “enforcement with consequences.”

Twenty-five years after the Immigration Reform and Control Act of 1986 (IRCA, P.L. 99-603) marked the beginning of the modern era in border enforcement, this report reviews recent enforcement efforts, takes stock of the current state of border security, and considers lessons that may be learned about a quarter century of enhanced migration control efforts at U.S. borders. IRCA authorized a 50% increase in the size of the USBP, and at least 10 additional laws since then have included provisions related to migration enforcement and/or border security. Appropriations for the USBP have increased about 750% since 1989—a number which excludes many other programs related to border enforcement.

On one hand, robust investments at the border have been associated with a sharp drop in the number of aliens apprehended, especially in the sectors first targeted for enhanced enforcement. The number and proportion of people apprehended more than once (recidivists) and those with serious criminal records are also at the lowest levels ever recorded. On the other hand, overall illegal inflows continued to increase in the 20 years after 1986, with the estimated unauthorized population more than tripling, even after almost 3 million aliens were granted amnesty as part of IRCA. The only significant decrease in unauthorized migration appears to have occurred since 2007, and it is unclear how much of the drop-off is due to increased enforcement and how much is a result of the U.S. economic downturn and other systemic factors.

At the same time, enhanced border enforcement may have contributed to a number of secondary costs and benefits. To the extent that border enforcement successfully deters illegal entries—an effect that is also difficult to measure since deterrence ultimately involves decisions made in towns and villages far away from U.S. borders—such enforcement may reduce border-area violence and migrant deaths, protect fragile border ecosystems, and improve the quality of life in border communities. But to the extent that aliens are not deterred, the concentration of enforcement resources on the border may increase border area violence and migrant deaths, encourage unauthorized migrants to find new ways to enter illegally and to remain in the United States for longer periods of time, damage border ecosystems, harm border-area businesses and the quality of life in border communities, and strain U.S. relations with Mexico and Canada.

Thus, this report concludes by raising additional questions about future investments at the border, how to weigh such investments against other enforcement strategies, and the relationship between border enforcement and the broader debate about U.S. immigration policy.

Cummings Issues Report Detailing Five Years of Gunwalking Operations in Arizona

February 2, 2012 Comments off

Cummings Issues Report Detailing Five Years of Gunwalking Operations in Arizona
Source: U.S. House of Representatives Committee on Oversight and Government Reform (Minority)

Today, Rep. Elijah E. Cummings, Ranking Member of the House Committee on Oversight and Government Reform, issued a 95-page minority staff report entitled “Fatally Flawed: Five Years of Gunwalking in Arizona.” The report describes the results of the Committee’s year-long investigation into the actions and circumstances that led to multiple gunwalking operations in Arizona from 2006 to 2010.

According to a letter Cummings sent to Committee Members accompanying the report, “this report tells the story of how misguided gunwalking operations originated in 2006 as ATF’s Phoenix Field Division devised a strategy to forgo prosecutions against low-level straw purchasers while they attempted to build bigger charges.”

The report finds that this strategy failed to include sufficient operational controls to stop these dangerous weapons from getting into the hands of violent criminals, creating a danger to public safety on both sides of the border. Rather than halting operations after flaws became evident, ATF’s Phoenix Field Division launched several similarly reckless operations over the course of several years, according to the report, also with tragic results.

+ Full Report (PDF)

The Challenge of Violent Drug-Trafficking Organizations: An Assessment of Mexican Security Based on Existing RAND Research on Urban Unrest, Insurgency, and Defense-Sector Reform

January 8, 2012 Comments off

The Challenge of Violent Drug-Trafficking Organizations: An Assessment of Mexican Security Based on Existing RAND Research on Urban Unrest, Insurgency, and Defense-Sector Reform
Source: RAND Corporation

Violent drug-trafficking organizations (VDTOs) in Mexico produce, transship, and deliver into the United States tens of billions of dollars worth of narcotics annually, but their activities are not limited to drug trafficking. VDTOs have also engaged in human trafficking, weapon trafficking, kidnapping, money laundering, extortion, bribery, racketeering, and assassinations. In an effort to clarify the scope and details of the challenges posed by VDTOs, a RAND team conducted a Delphi expert elicitation exercise, the results of which offer an assessment of the contemporary security situation in Mexico through the lens of existing RAND research on related issues. The exercise centered around three strands of prior RAND research on urban instability and unrest, historical insurgencies, and defense-sector reform. Although this prior research was not designed specifically for the study of Mexico, all three areas offer applicable insights. Assessment scorecards from these projects were used to obtain input from the expert panel and to guide the resulting discussion. The goal was not to break significant new ground in understanding the dynamics of drug violence in Mexico or to offer a qualitative assessment of these dynamics, but rather to provide an empirically based platform for identifying key areas that merit further investigation.

+ Summary (PDF)
+ Full Document (PDF)

A vulnerability approach to the definition of the middle class

January 1, 2012 Comments off
Source:  World Bank (working paper)
Measurement of the middle class has recently come to the center of policy debate in middle-income countries as they search for the potential engines of growth and good governance. This debate assumes, first, that there is a meaningful definition of class, and second, that thresholds that define relatively homogeneous groups in terms of pre-determined sociological characteristics can be found empirically. This paper aims at proposing a view of the middle class based on vulnerability to poverty. Following this approach the paper exploits panel data to determine the amount of comparable income — associated with a low probability of falling into poverty — which could define the lower bound of the middle class. The paper looks at absolute thresholds, challenging the view that people above the poverty line are actually part of the middle class. The estimated lower threshold is used in cross-section surveys to quantify the size and the evolution of middle classes in Chile, Mexico, and Peru over the past two decades. The first relevant feature relates to the fact that the proposed thresholds lie around the 60th percentile of the distribution. The evidence also shows that the middle class has increased significantly in all three countries, suggesting that a higher number of households face lower probabilities of falling into poverty than they did in the 1990s. There is an important group of people, however, which cannot be defined as middle class from this perspective, but are not eligible for poverty programs according to traditional definitions of poverty.

Full Paper (PDF)

North American Transportation Statistics: Almost 93 Million Personal Vehicles Entered the United States in 2010

December 18, 2011 Comments off

North American Transportation Statistics: Almost 93 Million Personal Vehicles Entered the United States in 2010
Source: Bureau of Transportation Statistics

Almost 93 million personal vehicles entered the United States in 2010, 28.9 million from Canada and 64.0 million from Mexico, according to the U.S. Department of Transportation’s Bureau of Transportation Statistics’ (BTS). Additionally, 10.2 million trucks, 334,818 buses, and 33,790 trains entered the United States in 2010 .

Mexico’s “Narco-Refugees”: The Looming Challenge for U.S. National Security

November 24, 2011 Comments off

Mexico’s “Narco-Refugees”: The Looming Challenge for U.S. National Security
Source: Strategic Studies Institute, U.S. Army War College

Since 2006, when Mexican President Felipe Calderon declared war on the drug cartels, there has been a rise in the number of Mexican nationals seeking political asylum in the United States to escape the ongoing drug cartel violence in their home country. Political asylum cases in general are claimed by those who are targeted for their political beliefs or ethnicity in countries that are repressive or are failing. Mexico is neither. Nonetheless, if the health of the Mexican state declines because criminal violence continues, increases, or spreads, U.S. communities will feel an even greater burden on their systems of public safety and public health from “narco-refugees.” Given the ever increasing cruelty of the cartels, the question is whether and how the U.S. Government should begin to prepare for what could be a new wave of migrants coming from Mexico. Allowing Mexicans to claim asylum could potentially open a flood gate of migrants to the United States during a time when there is a very contentious national debate over U.S. immigration laws pertaining to illegal immigrants. On the other hand, to deny the claims of asylum seekers and return them to Mexico where they might very well be killed, strikes at the heart of American values of justice and humanitarianism. This monograph focuses on the asylum claims of Mexicans who unwillingly leave Mexico rather than those who willingly enter the United States legally or illegally. To successfully navigate through this complex issue will require a greater level of understanding and vigilance at all levels of the U.S. Government.

+ Full Paper (PDF)

Fiscal Reform for a Stronger Fairer and Cleaner Mexican Economy

November 24, 2011 Comments off

Fiscal Reform for a Stronger Fairer and Cleaner Mexican Economy
Source: Organisation for Economic Co-operation and Development

With slow growth and high inequality Mexico needs investments in infrastructure, education and social policies. Mexico has increased spending in all of these areas. This was easily financed thanks to fiscal reforms in 2007 and 2009 as well as high oil prices in recent years. Oil revenues, which account for around one third of budgetary receipts, are highly volatile, especially due to price movements, and the prospects for production are uncertain, even though less so than in previous years. Mexico has the lowest tax revenues as a share of GDP in the OECD and much of Latin America, even when oil-related revenues are included. The government should improve the efficiency of its public spending. Mexico spends significant sums on energy subsidies, which are in large part captured by higher-income groups. Moreover, these subsidies are not in line with Mexico’s ambitious goals to reduce greenhouse gas (GHG) emissions. These subsidies should be gradually withdrawn in line with the government’s goals. Extending cash benefits to the poor instead would be much more efficient to fight poverty and help citizens and the economy as a whole to buffer income shocks. Agricultural spending should be re-structured to finance more investment in public goods and less support for producers, which has proven ineffective in increasing agricultural productivity. Broadening the tax base by withdrawing some of the most distortive tax expenditures would make an important contribution to strengthen revenues. This would also help make the tax system simpler, thus reducing compliance costs as well as opportunities for tax avoidance and evasion. Efforts to enhance tax enforcement should continue.

+ Full Paper (PDF)

Living Longer in Mexico: Income Security and Health

November 11, 2011 Comments off

Living Longer in Mexico: Income Security and Health
Source: RAND Corporation

This analysis of aging and income security in Mexico establishes that the older population in Mexico is increasing quickly and that this population is especially vulnerable to poverty. Mexican citizens are living longer and overall have experienced an improvement in the quality of life compared to that of prior generations. However, this study demonstrates that social improvements are not affecting the daily lives of all persons equally. The authors attempt to uncover and highlight those differences. One of the primary challenges facing Mexico is a growing older population. The demographic transition in Mexico combined with the lack of formal sources of income in retirement place many older persons in a state of financial insecurity. The information contained in this monograph and the proposed policy research areas are intended to enlarge the portfolio of options for older Mexicans. The authors analyze wealth and sources of income during retirement, the relationship between health and wealth, urban and rural disparities, and the impact of migration spells to the United States on wealth accumulation and health insurance in Mexico.

+ Summary (PDF)
+ Full Report (PDF)

Informality in Mexico

October 23, 2011 Comments off

Informality in Mexico
Source: Organisation for Economic Co-operation and Development

Mexico has a relatively large informal sector by OECD standards. While this is in part a symptom of limited development and low productivity, it can also be to some extent its cause, as informal firms stay small to hide their activities and have limited access to productivity-enhancing government services, such a protection of property rights and training. A long-term and broad-based strategy with education at its core is needed for Mexico to reach its productivity potential and fight informality. Lowering the costs of formality, while enhancing its benefits and increasing the cost of non-compliance with labour and tax laws, will be an important part of this strategy. This would include more flexible labour laws, a further reduction in the business regulatory burden and a rethink of the social security package to enhance its attractiveness for low-wage workers and limit costs by making service provision more efficient. This Working Paper related to the 2011 OECD Economic Survey of Mexico. (

The Promise and Perils of Private Voluntary Regulation: Labor Standards and Work Organization in Two Mexican Garment Factories

October 16, 2011 Comments off

The Promise and Perils of Private Voluntary Regulation: Labor Standards and Work Organization in Two Mexican Garment Factories (PDF)
Source: MIT Sloan School of Management

What role can private voluntary regulation play in improving labor standards and working conditions in global supply chain factories? How does this system relate to and interact with other systems of labor regulation and work organization? This paper seeks to address these questions through a structured comparison of two factories supplying Nike, the world’s largest athletic footwear and apparel company. These two factories have many similarities – both are in Mexico, both are in the apparel industry, both produce more or less the same products for Nike (and other brands) and both are subject to the same code of conduct. On the surface, both factories appear to have similar employment (i.e., recruitment, training, remuneration) practices and they receive comparable scores when audited by Nike’s compliance staff. However, underlying (and somewhat obscured by) these apparent similarities, significant differences in actual labor conditions exist between these two factories. What drives these differences in working conditions? What does this imply for traditional systems of monitoring and codes of conduct? Field research conducted at these two factories reveals that beneath the code of conduct and various monitoring efforts aimed at enforcing it, workplace conditions and labor standards are shaped by very different patterns of work organization and human resource management policies. This paper is part of a larger project on globalization and labor standards organized by Professor Richard Locke of M.I.T.. In addition to the results presented in this paper (some of which appear as well in Monica Romis, “Beneath Corporate Codes of Conduct: What Drives Compliance in Two Mexican Garment Factories,” (Masters Thesis, Dept. of Urban Studies and Planning, M.I.T., 2005)), the project entailed field research in China, Turkey, Europe and the United States as well as systematic analysis of Nike’s factory audits of working conditions in over 800 factories in 51 countries.


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