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FDI, Local Sourcing, and Supportive Linkages with Domestic Suppliers: The Case of Monterrey, Mexico

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  • Jordaan, Jacob A.

Abstract

Summary In this paper, we use unique data from firm level surveys among foreign-owned and domestic producer firms as well as domestic suppliers to obtain novel direct empirical evidence on the level, supportive nature, and impact of input-output linkages in Monterrey, Mexico. Our main empirical findings are threefold. First, FDI firms and Mexican firms do not differ in their level of use of local suppliers of material inputs and production services. Second, we find evidence of a variety of types of support that producer firms transmit to their local suppliers. Importantly, FDI firms are significantly more supportive than Mexican firms. This applies in particular to types of support that are linked closely to improving the production processes of suppliers. We also find that several other producer firm characteristics are associated with the use of local suppliers or the provision of support. Third, we find significant differences between maquiladora firms of different generations regarding the scale and nature of their impact among local suppliers.

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Bibliographic Info

Article provided by Elsevier in its journal World Development.

Volume (Year): 39 (2011)
Issue (Month): 4 (April)
Pages: 620-632

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Handle: RePEc:eee:wdevel:v:39:y:2011:i:4:p:620-632

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Web page: http://www.elsevier.com/locate/worlddev

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Keywords: FDI maquiladora input-output linkages spillovers multivariate analysis Monterrey Mexico Latin America;

References

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Cited by:
  1. Kubny, Julia & Voss, Hinrich, 2014. "Benefitting from Chinese FDI? An assessment of vertical linkages with Vietnamese manufacturing firms," International Business Review, Elsevier, vol. 23(4), pages 731-740.
  2. Tomohiro MACHIKITA & Yasushi UEKI, 2013. "Who Disseminates Technology to Whom, How, and Why: Evidence from Buyer-Seller Business Networks," Working Papers, Economic Research Institute for ASEAN and East Asia (ERIA) DP-2013-26, Economic Research Institute for ASEAN and East Asia (ERIA).
  3. Simona, Gentile-Lüdecke & Axèle, Giroud, 2012. "Knowledge Transfer from TNCs and Upgrading of Domestic Firms: The Polish Automotive Sector," World Development, Elsevier, Elsevier, vol. 40(4), pages 796-807.
  4. Vandeplas, Anneleen & Minten, Bart & Swinnen, Johan F.M., 2012. "Multinationals versus cooperatives: The income and efficiency effects of supply chain governance in India," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil, International Association of Agricultural Economists 126892, International Association of Agricultural Economists.
  5. Chrysovalantou Milliou & Apostolis Pavlou, 2014. "Foreign Direct Investment Modes and Local Backward Linkages," CESifo Working Paper Series 4623, CESifo Group Munich.
  6. Giroud, Axèle & Jindra, Björn & Marek, Philipp, 2012. "Heterogeneous FDI in Transition Economies – A Novel Approach to Assess the Developmental Impact of Backward Linkages," World Development, Elsevier, Elsevier, vol. 40(11), pages 2206-2220.

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