From Local Development to Productive Internationalization

The Role of MERCOSUR and NAFTA in the Transformation of the Automotive Sector in Argentina and Mexico

Abstract

Argentina and Mexico experienced significant development in the automotive sector during the Second Post-War period within the framework of import substitution processes and "inward-looking" development. In the late seventies and early eighties, in the context of greater productive internationalization associated with the globalization of the capitalist economy following the 1970s crisis and the end of the cycle begun mid-century, the sector underwent significant changes due to the incorporation of new technologies in the production of vehicles, engines, instruments, chassis, and auto parts, and the relocation of its productive processes, which represented a true leap compared to previous stages. Consequently, as in other sectors, powerful global value chains (GVCs) were formed, in which our region participated. Economic and trade integration initiatives like MERCOSUR, which arose under the CEPAL model of "Open Regionalism," and Mexico's economic integration with the United States—begun in the eighties and deepened with the North American Free Trade Agreement (NAFTA) in 1994 under the liberalizing agenda of the GATT and later the WTO— created favorable conditions to fully establish regional value chains (RVCs) in the automotive sector. In the case of MERCOSUR, it was the formation of the Argentina-Brazil automotive axis, initiated in the eighties, that became the cornerstone of Argentine-Brazilian economic relations, directed by European and North American automakers operating in both countries. In the case of Mexico, North American firms relocated their production and assembly to the northern states, creating very specific production conditions. The objective of this paper is to compare, through a quantitative and qualitative analysis of information from automotive chambers and regional blocs, the evolution of the sector in both integration processes, to analyze the functionality of the agreements for the sector's development, and to establish results after three decades of operation in a current context of the reconfiguring of the sector and the integration agreements.