Global challenge to local production systems: The transformation of Mexican clusters after the opening to trade.

In recent years the world has gone through significant changes in terms of trade liberalisation, globalisation of industry and economic integration between different types of countries. The global context calls for new arrangements of industry, leading to an adjustment in the regions where production actually takes place. In this context, local productions systems (LPSs) need to adapt to the change in trade regimes. The challenge appears bigger for less developed countries, which in many cases have relied on productive structures of import substitution industrialisation (ISI). This thesis studies different types of clusters in Mexico after trade liberalisation and economic integration. The main aim of this thesis is to examine the capacity of different LPSs to adapt and learn in conditions of higher competition. Using empirical evidence, three clusters specialised in clothing production that originally shared similarities during ISI but that then followed different forms of organisation and trajectories during the open economy were assessed using both the flexible industrial district and value chain approaches. Industrial organisation and linkages are traced to identify to what extent LPSs have improved or weakened in the open economy in comparison to the ISI times. The research found that LPSs that have restructured their production towards international production systems have not only survived the change in trade regime but have also benefited from the new context. They have adjusted their industrial organisation, upgraded knowledge and strengthened their LPSs, leading to greater local spillovers. Foreign partners have been crucial for product and process upgrading in the export-oriented LPSs, and notably NAFTA reduced and eliminated trade and production barriers, thereby permitting functional upgrading. In contrast, nationally-oriented LPSs have not adapted their organisation and production practices and lack internationalisation, strong linkages and innovation. This kind of cluster stays in the same traditional platform and is unable to upgrade and benefit from the new environment. Results suggest the rising of new, stronger and more competitive LPSs under a new trade regime