Technological spillovers in the global automobile industry and the creation of local suppliers: the case of Mexico.

Publication Type:

Conference Paper


Gerpisa colloquium, Paris (2013)


SME's in the auto value chain, spin offs in the auto industry, tecnological spillovers


Technological spillovers in the global automobile industry and the creation of local suppliers: the case of Mexico.
Oscar F. Contreras
El Colegio de la Frontera Norte, México.

Abstract submitted to the 21st International Colloquium of Gerpisa

Researchers have long been interested in the dynamics of spillovers and their effect on development. Despite some general agreement on the increased relevance of FDI in national economies, the nature and the consequences of spillovers are severely disputed. Beyond the political and ideological preferences, the measurement of such effects is problematic and the micro mechanisms through which these effects are produced are not well identified nor explained (Saggi, 2002; Blomsröm and Kokko, 1998).
For the last 30 years Mexico assumed an increasingly relevant role in the manufacturing of automobiles for the North American region. Aside of its geographic proximity with the United States, Mexico became a highly attractive location for global automobile assemblers and their global suppliers because low production costs came associated with high productivity levels, making this country a critical location in the struggle for the North American market.
In theory, this should result in specific spillover effects that might increase the opportunities for local suppliers. However, most of the research done on the Mexican auto industry emphasizes the limits of this industry in generating local linkages. This specific topic is relevant for the debate on the spillover effects from MNCs over the hosting countries and regions, given the lack of evidence and the theoretical “black box” on the mechanisms operating at the micro level.
This paper is based in a study conducted in 2011 and 2012, designed to gather evidence on new local knowledge-intensive firms within the supplier networks of the automotive industry in Mexico. A total of 100 visits to SME’s plants and owners interviews were conducted, focusing on the origins of the firm, the dynamics of the information flows and knowledge transmission, and the upgrading patterns through the value chain. The main contribution of this paper consists in the development of a typology of the mechanisms that enable these firms to emerge and evolve, and a stylized path of the upgrading of local companies within the automotive supply chain.

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