IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article or follow this journal

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

  • Jordaan, Jacob A.

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.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.sciencedirect.com/science/article/pii/S0305-750X(10)00176-2
Download Restriction: Full text for ScienceDirect subscribers only

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by Elsevier in its journal World Development.

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

as
in new window

Handle: RePEc:eee:wdevel:v:39:y:2011:i:4:p:620-632
Contact details of provider: Web page: http://www.elsevier.com/locate/worlddev

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Blalock, Garrick & Gertler, Paul J., 2008. "Welfare gains from Foreign Direct Investment through technology transfer to local suppliers," Journal of International Economics, Elsevier, vol. 74(2), pages 402-421, March.
  2. Brian Aitken & Gordon H. Hanson & Ann E. Harrison, 1994. "Spillovers, Foreign Investment, and Export Behavior," NBER Working Papers 4967, National Bureau of Economic Research, Inc.
  3. repec:col:000094:003523 is not listed on IDEAS
  4. Jacob Jordaan, 2011. "Cross-sectional estimation of FDI spillovers when FDI is endogenous: OLS and IV estimates for Mexican manufacturing industries," Applied Economics, Taylor & Francis Journals, vol. 43(19), pages 2451-2463.
  5. Jordaan, Jacob A. & Sanchez-Reaza, Javier, 2006. "Trade Liberalization and Location: Empirical Evidence for Mexican Manufacturing Industries," The Review of Regional Studies, Southern Regional Science Association, vol. 36(3), pages 279-303.
  6. Dussel Peters, Enrique, 1999. "La subcontratación como proceso de aprendizaje: el caso de la electrónica en Jalisco," Sede de la CEPAL en Santiago (Estudios e Investigaciones) 31374, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
  7. Robert E. Lipsey, 2004. "Home- and Host-Country Effects of Foreign Direct Investment," NBER Chapters, in: Challenges to Globalization: Analyzing the Economics, pages 333-382 National Bureau of Economic Research, Inc.
  8. Kozo Kiyota & Toshiyuki Matsuura & Shujiro Urata & Yuhong Wei, 2005. "Reconsidering the Backward Vertical Linkage of Foreign Affiliates: Evidence from Japanese Multinationals," Discussion papers 05019, Research Institute of Economy, Trade and Industry (RIETI).
  9. Jonathan Potter & Barry Moore & Rod Spires, 2002. "The wider effects of inward foreign direct investment in manufacturing on UK industry," Journal of Economic Geography, Oxford University Press, vol. 2(3), pages 279-310, July.
  10. Maurice Kugler, . "Spillovers from Foreign Direct Investment: Within or between Industries?," Borradores de Economia 369, Banco de la Republica de Colombia.
  11. Kenney, Martin & Florida, Richard, 1994. "Japanese maquiladoras: Production organization and global commodity chains," World Development, Elsevier, vol. 22(1), pages 27-44, January.
  12. Javier Sánchez-Reaza, 2002. "The Impact of Trade Liberalization on Regional Disparities in Mexico," Growth and Change, Wiley Blackwell, vol. 33(1), pages 72-90.
  13. Blomström, Magnus & Kokko, Ari, 2003. "The Economics of Foreign Direct Investment Incentives," CEPR Discussion Papers 3775, C.E.P.R. Discussion Papers.
  14. James Biles, 2004. "Export-oriented Industrialization and Regional Development: A Case Study of Maquiladora Production in Yucatan, Mexico," Regional Studies, Taylor & Francis Journals, vol. 38(5), pages 517-532.
  15. Gordon H. Hanson, 1994. "Regional Adjustment to Trade Liberalization," NBER Working Papers 4713, National Bureau of Economic Research, Inc.
  16. Francis, John & Mukherji, Ananda & Mukherji, Jyotsna, 2009. "Examining relational and resource influences on the performance of border region SMEs," International Business Review, Elsevier, vol. 18(4), pages 331-343, August.
  17. Menno Vellinga, 2000. "Economic internationalisation and regional response: The case of North Eastern Mexico," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 91(3), pages 293-307, 08.
  18. Zanfei, Antonello, 2000. "Transnational Firms and the Changing Organisation of Innovative Activities," Cambridge Journal of Economics, Oxford University Press, vol. 24(5), pages 515-42, September.
  19. Crespo, Nuno & Fontoura, Maria Paula, 2007. "Determinant Factors of FDI Spillovers - What Do We Really Know?," World Development, Elsevier, vol. 35(3), pages 410-425, March.
  20. Beata S. Javorcik, 2008. "Can Survey Evidence Shed Light on Spillovers from Foreign Direct Investment?," World Bank Research Observer, World Bank Group, vol. 23(2), pages 139-159, June.
  21. Ramirez, Miguel D., 2003. "Mexico under NAFTA: a critical assessment," The Quarterly Review of Economics and Finance, Elsevier, vol. 43(5), pages 863-892.
  22. Benjamin Faber, 2007. "Towards the Spatial Patterns of Sectoral Adjustments to Trade Liberalisation: The Case of NAFTA in Mexico," Growth and Change, Wiley Blackwell, vol. 38(4), pages 567-594.
  23. Magnus Blomstrom & Ari Kokko, 1997. "Regional Integration and Foreign Direct Investment," NBER Working Papers 6019, National Bureau of Economic Research, Inc.
  24. Jacob A. Jordaan, 2008. "State Characteristics and the Locational Choice of Foreign Direct Investment: Evidence from Regional FDI in Mexico 1989-2006," Growth and Change, Wiley Blackwell, vol. 39(3), pages 389-413.
  25. Thompson, Edmund R., 2002. "Clustering of Foreign Direct Investment and Enhanced Technology Transfer: Evidence from Hong Kong Garment Firms in China," World Development, Elsevier, vol. 30(5), pages 873-889, May.
  26. Jacob A Jordaan, 2008. "Regional foreign participation and externalities: new empirical evidence from Mexican regions," Environment and Planning A, Pion Ltd, London, vol. 40(12), pages 2948-2969, December.
  27. Sargent, John & Matthews, Linda, 2004. "What Happens When Relative Costs Increase in Export Processing Zones? Technology, Regional Production Networks, and Mexico's Maquiladoras," World Development, Elsevier, vol. 32(12), pages 2015-2030, December.
  28. Sargent, John & Matthews, Linda, 2008. "Capital Intensity, Technology Intensity, and Skill Development in Post China/WTO Maquiladoras," World Development, Elsevier, vol. 36(4), pages 541-559, April.
  29. Jordaan, Jacob A., 2005. "Determinants of FDI-induced externalities: New empirical evidence for Mexican manufacturing industries," World Development, Elsevier, vol. 33(12), pages 2103-2118, December.
  30. Magnus Blomstrom & Edward N. Wolff, 1989. "Multinational Corporations and Productivity Convergence in Mexico," NBER Working Papers 3141, National Bureau of Economic Research, Inc.
  31. Raymond Robertson, 2007. "Trade and Wages: Two Puzzles from Mexico," The World Economy, Wiley Blackwell, vol. 30(9), pages 1378-1398, 09.
  32. Penelope Pacheco-López, 2004. "Foreign Direct Investment, Exports and Imports in Mexico," Studies in Economics 0404, School of Economics, University of Kent.
  33. Blomström, Magnus & Kokko, Ari, 1996. "Multinational Corporations and Spillovers," SSE/EFI Working Paper Series in Economics and Finance 99, Stockholm School of Economics.
  34. Ivarsson, Inge & Alvstam, Claes Goran, 2005. "Technology transfer from TNCs to local suppliers in developing countries: A study of AB Volvo's truck and bus plants in Brazil, China, India, and Mexico," World Development, Elsevier, vol. 33(8), pages 1325-1344, August.
  35. Jorge Carrillo, 2004. "Transnational Strategies and Regional Development: The Case of GM and Delphi in Mexico," Industry and Innovation, Taylor & Francis Journals, vol. 11(1-2), pages 127-153.
  36. Buitelaar, Rudolf M. & Perez, Ramon Padilla, 2000. "Maquila, Economic Reform and Corporate Strategies," World Development, Elsevier, vol. 28(9), pages 1627-1642, September.
  37. Jordaan, Jacob A., 2008. "Intra- and Inter-industry Externalities from Foreign Direct Investment in the Mexican Manufacturing Sector: New Evidence from Mexican Regions," World Development, Elsevier, vol. 36(12), pages 2838-2854, December.
  38. Jindra, Björn & Giroud, Axèle & Scott-Kennel, Joanna, 2009. "Subsidiary roles, vertical linkages and economic development: Lessons from transition economies," Journal of World Business, Elsevier, vol. 44(2), pages 167-179, April.
  39. Tain-Jy Chen & Homin Chen & Ying-Hua Ku, 2004. "Foreign direct investment and local linkages," Journal of International Business Studies, Palgrave Macmillan, vol. 35(4), pages 320-333, July.
  40. Brannon, Jefferey T. & James, Dilmus D. & Lucker, G. William, 1994. "Generating and sustaining backward linkages between maquiladoras and local suppliers in Northern Mexico," World Development, Elsevier, vol. 22(12), pages 1933-1945, December.
  41. Lall, Sanjaya, 1980. "Vertical Inter-Firm Linkages in LDCs: An Empirical Study," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 42(3), pages 203-26, August.
  42. Belderbos, Rene & Capannelli, Giovanni & Fukao, Kyoji, 2001. "Backward Vertical Linkages of Foreign Manufacturing Affiliates: Evidence from Japanese Multinationals," World Development, Elsevier, vol. 29(1), pages 189-208, January.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:eee:wdevel:v:39:y:2011:i:4:p:620-632. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.