TY  - JOUR
AU  - Hanson,Gordon H.
TI  - The Effects of Offshore Assembly on Industry Location: Evidence from U.S. Border Cities
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5400
PY  - 1995
Y2  - December 1995
UR  - http://www.nber.org/papers/w5400
L1  - http://www.nber.org/papers/w5400.pdf
N1  - Author contact info:
Gordon H. Hanson
IR/PS 0519
University of California, San Diego
9500 Gilman Drive
La Jolla, CA  92093-0519
Tel: 858/822-5087
Fax: 858/534-3939
E-Mail: gohanson@ucsd.edu
M1  - published as Gordon H. Hanson. "The Effects of Offshore Assembly on Industry Location: Evidence from U.S. Border Cities," in Robert C. Feenstra, editor, "The Effects of U.S. Trade Protection and Promotion Policies" University of Chicago Press (1997)

M2  - featured in NBER digest on 1996-04-01
AB  - In this paper, I examine how the growth of offshore assembly in Mexico has affected manufacturing activity in U.S. border cities. Under the offshore assembly provision of the U.S. tariff schedule, goods that are assembled abroad using U.S.-manufactured components receive preferential tariff treatment upon reentry into the United States.  Foreign assembly plants in Mexico, most of which are owned by U.S.-based multinationals, are overwhelmingly concentrated along the border with the United States.  I combine data on employment and earnings in two-digit manufacturing industries for U.S. border cities with data on employment and value added in foreign assembly plants in the corresponding Mexican border cities.  I study the effect that the expansion of offshore assembly in a Mexican border city has on durable and nondurable manufacturing activities in the neighboring U.S. border city.  The estimation results show strong support for the hypothesis that the growth of export assembly in Mexico increases the demand for manufacturing goods produced in U.S. border cities.  Implications of the North American Free Trade Agreement for the U.S.-Mexico border region are discussed.
ER  -