This paper examines the impact of the operations of foreign-owned multinational
firms on the productivity growth of Mexican manufacturing industries,
1965-1984. It investigates both the extent to which the penetration of a sector
by foreign-owned firms affects the productivity of local firms in that sector
and whether there is any evidence of convergence between that industry's productivity
level and that of the United States. The main results can be summarized
as follows: First, productivity levels of locally-owned firms in
Mexico have converged to those of foreign-owned firms. Second, both the rate
of productivity growth of local firms and their rate of catch-up to the multinationals
are positively related to the degree of foreign ownership of an
industry. Third, the productivity gap between Mexico and U.S. manufacturing
has diminished between the mid-1960s and the mid-1980s. Fourth, the rate of
productivity growth of Mexican industries and its rate of convergence to the
United States are higher in industries with a greater presence of multinationals.
We conclude that multinational firms have contributed to a
geographical diffusion of technology and acted as a bridge between advanced
and less advanced countries.
*Published:
William Baumol, Richard Nelson and Ed Wolff, eds., Convergence of Productivty: Cross-National Studies and Historical Evidence, Oxford University Press Oxford, 1994
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