Transnational Strategies and Regional Development: The Case of GM and Delphi in Mexico

The Mexican automotive industry has been undergoing continuous and rapid change over the past two decades. Much of this change has been understood in the context of related processes of firm restructuring and globalization. The paper examines GM's global strategies and describes the profound transformation of Mexican affiliates in re-orientating away from production for the domestic market towards global operations. It also analyses the successful experience of Delphi (GM's former components division) in Ciudad Juarez as an example of how the agglomeration can add value under specific social and institutional conditions by forming a sectoral cluster in which a network of companies accelerate learning, especially among engineers and technicians. Delphi is one of the most conspicuous examples of the process of productive integration within the North American Free Trade Agreement (NAFTA), as well as a model of technological learning and upgrading in an emerging economy. Finally the paper examines the limited influence of public policy initiatives aimed at building on the upgrading strategies of transnational firms in Mexico to stimulate endogenous regional development by local suppliers.