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To Create an Industry: The Growth of Consumer Electronics Manufacturing in Mexico and Taiwan

Department of Urban Studies and Planning, Massachusetts Institute of Technology, Cambridge, MA 02139, USA

Martin Kenney

Department of Human and Community Development, University of California-Davis, Davis, CA 95616, USA

In 1970, an observer of the investment by the consumer electronics multinationals in Mexico and Taiwan could not have predicted the marked difference in the develop ment of these two nations. The contrast between the Mexican and Taiwanese elec tronics industry could not be more striking—Taiwan's electronics industry was a result of expanding foreign direct investment. Taiwan experienced an expansion of foreign exchange, employment and development of assembler-supplier relations. But, most importantly, it developed local firms capable of supplying these foreign assemblers. Among the Latin American nations, Mexico received the preponderance of investment in consumer electronics. Unlike in Taiwan, investments in Mexico never led to the development of an indigenous industry nor created a synergy between the assemblers and the local suppliers. This paper explores the reasons for the divergence between the two economies, related to the investor's objectives, the investor's position in the international market, and the specific regional location of production chosen for each nationllocality. A complete and historically accurate understanding of the divergence between these two countries can be obtained by examining firm and general industry strategies regarding production and production location between 1965 and 1982. This permits a nuanced understanding of the complexities of local industrial development and the potential role of the foreign investor and, in the process, move beyond simplified arguments about the centrality of the state industrical development.

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