The role of multinationals in the host country: Spillover effects from the presence of auto car makers in México

Abstract

MULTINATIONAL COMPANIES (MNES) HAVE A LONG PRESENCE IN THE AUTOMOBILE INDUSTRY IN MEXICO, SINCE 1925. THE NORTH AMERICA FREE TRADE AGREEMENT (NAFTA) HAS PROMOTED THIS FOREIGN-OWNED INDUSTRY TO DEVELOP THE LOCALLY OWNED AUTO SUPPLIER INDUSTRY. IN THIS STUDY, WE FOCUS ON TWO ANALYSES: IN THE FIRST ONE, THE "DOUBLE DIAMOND" MODEL IS USED TO EXAMINE THE SOURCES OF COMPETITIVENESS OF THE AUTO INDUSTRY, THE AUTO SUPPLIERS, AND THE POSSIBLE SPILLOVER EFFECTS ON FIRST AND SECOND TIER SUPPLIERS. IN THE SECOND ONE, WE FOCUS ON A LOCAL CASE BY ANALYZING THE CLUSTER LOCATED IN PUEBLA TO SEE THE RELATIONS BETWEEN THE ORIGINAL EQUIPMENT MANUFACTURER VOLKSWAGEN (OEMVW) AND ITS SUPPLIERS. OUR FINDINGS INDICATE THAT THE FOREIGN-OWNED AUTO INDUSTRY IN MEXICO HAS BEEN SUCCESSFUL IN TERMS OF GAINING WORLD'S EXPORT MARKET SHARE WITHIN THE PERIOD 1993-2003 AND THAT MNES HAVE PROMOTED THE COMPETITIVENESS OF SOME EXISTING LOCALLY OWNED SUPPLIERS THROUGH COLLABORATIVE AGREEMENTS AND JOINT VENTURES. THE LOCAL CASE OF THE PUEBLA CLUSTER REVEALS THAT SOME LOCAL, IN ITS MAJORITY FOREIGN-OWNED, AUTO SUPPLIERS HAVE BEEN CERTIFIED AND INTEGRATED AS TIER 1 SUPPLIERS OF THE OEMVW, BUT THERE IS NOT ENOUGH EVIDENCE THAT TIER 2 AND 3 LOCALLY OWNED SUPPLIERS HAVE BEEN FULLY INTEGRATED INTO THE SUPPLY CHAIN.