External sector and its ability to boost the dynamics of manufacturing activity in Mexico

Abstract

This research analyzes the main variables of the external sector and its relationship with the manufacturing sector; it mainly seeks to question the ability of the FDI and exports to boost manufacturing activity through employment. To this end, three estimates are made: with a quarterly temporality starting in 2007 and ending in 2019, the first includes data at the national level; a second uses data at the regional level, specifically analyzes the behavior of the manufacturing sector and its relationship with the external sector on the northern border of Mexico; finally, the third estimates this same relationship but at the local level, that is, the six entities that comprise the region bordering the United States. Regressions are performed in four different ways with the OLS method for the national and local case, the data panel model is used with six cross sections for the regional case. The results indicate that at none of the three levels of spatial disaggregation is FDI significant; unlike employment, human capital and manufacturing exports which are significant and robust to promote the dynamics of manufacturing activity.