Mexico's maquiladora expansion during the 1990s: an environmental assessment

Empirical studies searching for standard environmental quality impacts of economic growth and international trade have overlooked the connection between production sharing manufacture exports and the rise of industrial hazardous waste emissions. This investigation connects the Mexican Northern Border Maquiladora export expansion with rising Maquiladora emissions and Mexico–U.S. transfers of hazardous waste during the 1990s. Two mechanisms, a sector scale and sector product composition effect, are derived from a one-industry model, which isolates the Maquiladora component of manufactures from the rest of the Mexican economy. Scale refers to the change in emissions and bilateral transfers of waste given an increase in the economic activity of a particular Maquiladora sector. Product composition refers to sector differences in output and emissions due to (a) differences in relative skilled/less-skilled wages across Maquiladora sectors and (b) Maquiladora sector differences in the demand for imported intermediate inputs. An empirical test reveals there is weak presence of the scale effect and a rather strong presence of the product composition effect explained by an increasing demand for imported intermediate inputs. A Maquiladora sector-type variable has no imp act on emissions and bilateral transfers of waste. A positive impact on emissions and bilateral transfers of waste, due to an increase in the demand for imported intermediates, is noticeable following the Mexican Peso crisis: 1995–1999