Reference no: EM132895934

Globalization is changing the way nations communicate with each other. As the flow of goods and resources across borders deepens, national economies are integrated. A fall in trade barriers or transport costs in standard theoretical models causes a rise in trade between producers in one country and consumers in another. Part of what globalization entails is greater international trade in the final product, but that is by no means the entire story. In the current environment, businesses are more able to split their operations globally, placing each production stage in the country where it can be achieved at the least cost.

Market size and availability of skilled labor in the US make U.S. companies fairly effective in product design and marketing. Apparel assembly companies in Mexico's outlying regions have broken their relations with Mexico City and now rely on U.S. firms for design and marketing services. This shift caused contracting for the apparel industry in Mexico City and led to an expansion of apparel assembly in outlying locations, particularly those on the Mexico-U.S. Land.