ABSTRACT
Mexican researchers and policy makers frequently have raised questions about whether Mexico's border industrialization program has yielded positive net benefits to the country. During World War II Mexico and the United States signed an agreement that allowed Mexican laborers, principally agricultural workers, to cross into the United States to work. Real labor cost as a whole is lower in Mexico because labor productivity in general is lower, and because Mexico has abundant supplies of unskilled labor. If a proper analysis of the economic net benefits of the maquiladoras is to be undertaken, care must be taken that the major inputs are valued in accordance with their scarcity values or opportunity costs. In the period from the late 1930s to the late 1950s, Mexico followed a development policy of import substitution, especially in the consumer goods sector.
