Abstract

New trends are now taking place within manufacturing industries led by multinational corporations (MNCs). Globalization and liberalization together with the information technology (IT) revolution has accelerated “fables” industry in the network economy, i.e. outsourcing production processes and global parts procurement by MNCs. As a consequence of this, the primary function of the MNC has changed from that of manufacturer to ‘service’ provider by outsourcing production processes to foreign contract manufacturers (CMs). NAFTA in fact mutated Mexico into a production platform toward the US and Canada as well as Latin American countries. We can observe these dramatic changes, for instance, in Guadalajara in Mexico, now called the “Silicon Valley in the South”. Since MNCs use their brand names to sell products, their business function becomes close to that of the fashion industry. They market their products in the same way as Gucci and Chanel sell products of original design carrying their brand names. Therefore, product design and marketing become highly important for MNCs to achieve success in business while domestic providers have been left behind for their parts and components supply in this new global supply chain.

JEL Classification: L60; L11.