The Relocation of the Automotive Industry in Brazil and Mexico: Between Corporate Strategies and Industrial Policies

Abstract

The objective of this chapter is to illustrate the impact of global and regional factors on the development and changes in the distribution of the automotive industry in Brazil and Mexico using the global value chain (GVC) analytical framework. It is argued that, although the two countries occupy different positions in the GVC of the automotive industry, both have experienced a profound transition in its spatial distribution. The chapter compares the countries’ political and economic factors and the international determinants which triggered the relocation processes in this industry. Since the mid-1980s, it has been shifting from an isolated national industry, established within a strategy of import-substituting industrialisation (ISI), to an integrated global industry. The resultant transformation in the two countries came in the form of both the modernisation of some factories and closure of the least profitable and technologically antiquated ones, replaced by new plants in previously weakly industrialised areas. The restructuring of this sector in both countries was successful, as shown by the increased employment and car production, and in Mexico also by a sharp growth in export. The visible aspects of the transformation also include changes in its spatial distribution in the two countries, and this is the main subject of the discussion presented in this chapter.