Answer to Question #30545 in Economics for nhatnguyen tran

Question

What are some of the drawbacks that companies moving to Silicon Border should be aware of and need to manage?

Answer 1

The Mexican Government is working with U.S. company Silicon Border to establish a 15 square mile industrial park in the vicinity of Mexicali, Mexico.
Mexico will provide appropriate infrastructure for chip manufacturing plants,
as well as a very attractive 10 year tax exemption plan (already approved).
Mexico has a hard time competing with China and Taiwan due to the higher cost
of labor for Mexican workers, but the government hopes to outweigh that
disadvantage with the more favorable tax policy, the governmental stability,
and the reasonable proximity to both the corporation and its consumers. Instead
of shipping products by boat, which takes three weeks plus seaport costs, the
products can be shipped by land in a matter of hours. The project may cost the
Mexican Government billions of dollars (hundreds of millions in developing
infrastructure, and much more in taxes), but it may also provide jobs for
thousands of Mexicans and give Mexico a foothold in the chip manufacturing
industry, which is a multibillion dollar industry that is still growing
briskly.