Intra- and Inter-industry Externalities from Foreign Direct Investment in the Mexican Manufacturing Sector: New Evidence from Mexican Regions

This paper presents new empirical evidence on externalities from Foreign Direct Investment (FDI) in several Mexican regions in the early 1990s. The main findings are threefold. First, the presence of FDI creates negative externalities within industries and positive externalities between industries t...

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Bibliographic Details
Published in:World development Vol. 36; no. 12; pp. 2838 - 2854
Main Author: Jordaan, Jacob A.
Format: Journal Article
Language:English
Published: Oxford Elsevier Ltd 01.12.2008
Elsevier
Pergamon Press Inc
Series:World Development
Subjects:
Externalities
Externality
FDI
FDI maquiladora externalities technology gap geographic concentration Mexico Latin America
Foreign direct investment
Foreign investment
Foreign investments
Free trade
geographic concentration
Heterogeneity
Industrial structure
International trade
Latin America
Liberalization
Location of industry
Manufacturing
Manufacturing industry
maquiladora
Mexico
Networks
Regional analysis
Regions
Studies
Technological change
Technology
technology gap
Trade liberalization
Twin plants
Mexico
maquiladora
externalities
technology gap
geographic concentration
Mexico
FDI
Latin America
ISSN:0305-750X, 1873-5991
Online Access:Get full text
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Summary:This paper presents new empirical evidence on externalities from Foreign Direct Investment (FDI) in several Mexican regions in the early 1990s. The main findings are threefold. First, the presence of FDI creates negative externalities within industries and positive externalities between industries through backward linkages. Second, FDI-externalities are stimulated by large technological differences between FDI and Mexican firms and by geographic concentration of industries. Third, we identify a substantial level of regional heterogeneity of the externality impact of FDI, in line with the notion that FDI may have contributed to processes of changing regional prosperity under trade liberalization. The findings also imply that maquiladora firms in the border states are generating positive externalities.
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ISSN:0305-750X
1873-5991
DOI:10.1016/j.worlddev.2008.02.006