Maquiladoras

Definition

Maquiladoras are factories in Mexico run by foreign companies that export their products back to the home countries.

Analogy

Picture this as if you're running a lemonade stand but instead of setting it up in your own backyard, you set it up in your neighbor's yard because they have more foot traffic. You make the lemonade there and then bring it back to sell at your home. That's what foreign companies do with maquiladoras.

Related terms

Outsourcing: The business practice of hiring a party outside a company to perform services and create goods that were traditionally performed in-house by the company's own employees and staff.

Foreign Direct Investment (FDI): An investment made by a firm or individual in one country into business interests located in another country.

Export Processing Zone (EPZ): A customs area where one is allowed to import plant, machinery, equipment and raw materials, and export products duty-free.