Maquiladora

  

A maquiladora (mak-eel-uh-Dora...like the explorer girl) is a factory that’s free from the economic shackles of tariffs and duty fees in Mexico, but is run by another country, where it also exports its products (usually the U.S.). Maquiladoras came about when the U.S. said, “Hey Mexico, we’ll give you tariff and tax breaks on these factories if we can run them and bring the goods into our economy to sell to our folk...using your cheap labor! How’s that sound?” To which Mexico said, “Bueno.”

While the term was originally specific to factories in Mexico very close to the U.S. border (since the goods were then shipped over the border to the U.S.), the term has been used more broadly to describe the relationship in a maquiladora-like setup.

Maquiladora means “assembly plant.” Maquiladoras make up well over half of Mexico’s exports, and employs over a quarter of their labor force. Obviously, America’s benefitting from maquiladoras too, or else they wouldn’t be doing so well.

Related or Semi-related Video

Econ: What are Total Utility and Margina...4 Views

00:00

And finance Allah shmoop what our total utility and marginal

00:06

utility utility is in the eye of the beholder One

00:11

person might see high utility in some delicious slices of

00:15

pineapple pizza while another person only sees negative utility because

00:19

they believe pineapple on pizza together are tantamount to blasphemy

00:22

Well same goes with a nice car which has not

00:25

only transport utility but social utility One person might decide

00:29

they'll gain some much needed social points with a snazzy

00:33

a set of wheels there while another person might be

00:35

afraid they'd be you know beauty is a tool you

00:37

know Been there done that A convertible might offer high

00:40

utility around for someone living in Southern California and low

00:44

utility for someone living in New York where they take

00:47

the subway everywhere High quality socks for Christmas Yeah hi

00:50

utility If that's just what you needed Maybe you can't

00:53

get enough Willie socks or you collect socks with cool

00:56

patterns and need a real hobby Quickly Low utility If

01:00

you're a ten year old boy who was expecting something

01:02

decent not not socks Yeah Sorry there pal How much

01:06

utility Something Khun give someone Depends on that person's needs

01:09

and preferences utility even has its own standard measurement You

01:14

tools Yeah that's one standard utilities you don't well getting

01:17

into the nitty gritty of utility We have marginal utility

01:20

and total utility Marginal utility is the UDA Lt's a

01:24

consumer games from consuming one more unit of a good

01:27

or service Those marginal yodels added up well Is Total

01:32

Utility III the total amount of utility gained from a

01:34

good or service So let's take popcorn Salty buttery movie

01:38

theater popcorn you can't resist It's buttery goodness Plus you

01:42

don't go to the movies that off and you deserve

01:44

this popcorn In general we decide to buy something when

01:46

the march on the utility of a good or service

01:48

is greater than the marginal cost of it Well in

01:50

this case you're willing to pay that five bucks for

01:52

the popcorn because it's so worth it Yes all fourteen

01:56

thousand calories in that bucket Will the first bite of

01:58

popcorn is the most delicious Ah high marginal utility and

02:02

it gets your taste buds watering and ready for more

02:05

The second bite is great too as is the third

02:07

and fourth Lots of you tells Eventually though you don't

02:10

feel so good you just consumed more fake butter than

02:13

you'd wish on your worst enemy All of a sudden

02:15

you stopped eating the buttery deliciousness It's not worth a

02:19

full blown a stomach ache in the eight thousand calories

02:22

for the rest of the night So as you can

02:23

see your demand for popcorn like your demand Kerr for

02:26

most things is downward sloping The marginal value of that

02:30

in plus one piece of popcorn declines really fast when

02:34

marginal cost is greater than marginal utility while we stop

02:37

consuming additional marginal units of a good in this case

02:41

the marginal cost of eating one more handful of popcorn

02:43

plus the money you already paid for it just isn't

02:45

worth the marginal benefit you'd get out of the next

02:48

hand Phil since well it'll make you feel worse overall

02:51

All right well if you're the kind of person who

02:52

does keep eating it well even though you're not enjoying

02:55

it anymore because you paid for it well that's falling

02:58

for the sunk cost Fallaci yet don't do that It

03:02

doesn't make sense to pay for negative marginal utility Just

03:06

take your net positive utility and walk away slowly right

03:10

that's the sunk cost already paid It sunk its guns

03:12

Nothing you can do about it ever to get it

03:14

back All right well this downward spiral of marginal utility

03:17

starting out high with first unit of consumption and finishing

03:20

low with the last unit of consumption is called the

03:23

law of diminishing marginal returns As we consume more and

03:27

more of a good or service are marginal utility from

03:29

each additional unit consumed gets less and less Each bite

03:33

is less enjoyable than the last While some goods and

03:36

services we consumer subject to diminishing marginal utility like food

03:40

others can have constant or increasing marginal utility When people

03:44

first became addicted to a social media platform it's likely

03:47

their marginal utility was increasing which is why they started

03:51

using it more and more and more and more and

03:53

then became hooked And this is why we care about

03:55

marginal utility It often changes as we consume more and

03:58

more of a certain good or service If you want

04:01

to know how and why people consumers a bit of

04:03

a good or service the way they do well take

04:05

a look at their marginal utility when we want to

04:08

take a step back and look at the big picture

04:09

of a good or service Yeah that's where total utility

04:12

comes in If you want to compare goods and services

04:15

against each other while you can compare their total utilities

04:18

for instance don't regret that bucket of popcorn Your total

04:22

utility from popcorn consumption was decidedly worth the cost Each

04:26

bit of marginal utility from each bite added to the

04:30

total utility of the entire popcorn experience So it was

04:33

a good overall net of everything to you if anything

04:37

Well you should regret that one colonel and you still

04:39

have stuck in the back Your teeth there With any

04:41

luck it'll come out by Tuesday All right that's enough 00:04:43.615 --> [endTime] You tools Ah

Up Next

Econ: What is Outflow of Capital?
2 Views

What is Outflow of Capital? Outflow of capital happens when people move their money out of a country because of undesirable economic conditions. In...

Econ: What is Utility Maximization?
4 Views

What is Utility Maximization? Utility maximization is the technical term for the colloquial expression, “bang for the buck”. This refers to get...

Find other enlightening terms in Shmoop Finance Genius Bar(f)