NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Openness and Industrial Responses in a Wal-Mart World: A Case Study of Mexican Soaps, Detergents and Surfactant Producers

Beata Smarzynska Javorcik, Wolfgang Keller, James R. Tybout

NBER Working Paper No. 12457
Issued in August 2006
NBER Program(s):   ITI   PR   IO

This paper uses a case study approach to explore the effects of NAFTA and GATT membership on innovation and trade in the Mexican soaps, detergents and surfactants (SDS) industry. Several basic findings emerge. First, the most fundamental effect of NAFTA and the GATT on the SDS industry was to help induce Wal-Mart to enter Mexico. Once there, Walmex fundamentally changed the retail sector, forcing SDS firms to cut their profit margins and/or innovate. Those unable to respond to this new environment tended to lose market share and, in some cases, disappear altogether. Second, partly in response to Walmex, many Mexican producers logged impressive efficiency gains during the previous decade. These gains came both from labor-shedding and from innovation, which in turn was fueled by innovative input suppliers and by multinationals bringing new products and processes from their headquarters to Mexico. Finally, although Mexican detergent exports captured an increasing share of the U.S. detergent market over the past decade, Mexican sales in the U.S. were inhibited by a combination of excessive shipping delays at the border and artificially high input prices (due to Mexican protection of domestic caustic soda suppliers). They were also held back by the major re-tooling costs that Mexican producers would have had to incur in order to establish brand recognition among non-Latin consumers, and in order to comply with zero phosphate laws in many regions of the United States.

download in pdf format
   (286 K)

email paper

This paper is available as PDF (286 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w12457

Published: Beata Javorcik & Wolfgang Keller & James Tybout, 2008. "Openness and Industrial Response in a Wal-Mart World: A Case Study of Mexican Soaps, Detergents and Surfactant Producers," The World Economy, Blackwell Publishing, vol. 31(12), pages 1558-1580, December. citation courtesy of

Users who downloaded this paper also downloaded these:
Coppejans, Gilleskie, Sieg, and Strumpf w12156 Consumer Demand under Price Uncertainty: Empirical Evidence from the Market for Cigarettes
Iacovone, Smarzynska Javorcik, Keller, and Tybout w17204 Supplier Responses to Wal-Mart's Invasion of Mexico
Hausman and Leibtag w11809 Consumer Benefits from Increased Competition in Shopping Outlets: Measuring the Effect of Wal-Mart
Holmes w13783 The Diffusion of Wal-Mart and Economies of Density
Neumark, Zhang, and Ciccarella w11782 The Effects of Wal-Mart on Local Labor Markets
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us