MNCs strategies and their linkages with SMEs

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Durán, Clemente Ruiz
Carrillo, Jorge
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This chapter analyses the Multinationals corporations in Mexico, particularly their linkages with small and medium enterprises. Mexico has been an important magnet of foreign direct investment (FDI), particularly during the last forty years of the last century. The FDI has played a very important role in Mexico economic growth, particularly in manufacturing exports. But since the mid eighties the Mexican economy had change deeply from an import substitution model to export platform. The FDI has important presence in many different sectors with a wide range of technology. Mexican multinationals have been developed as well. Although the exports and value add is highly concentrated in a few hundreds of Multinationals, Mexico's manufacturing is based on a broad platform of small and medium enterprises. The US has become the main investor, with its share of total FDI reaching almost two thirds of the total. In spite the huge increase in exports, particularly since NAFTA, the economic growth has been quite mediocre. This performance is even worse when compared the 2001- 2004 periods to its primary trading partners and competitors. Investment amounts have decreased considerably in the new Millennium. During 2000-2003, it went from being close to 17 billion dollars down to 10 billion. Moreover, manufacturing and maquiladoras' share in the overall FDI has decreased from 9.4 million of dollars in 2000 to 4.7 in 2003. Several industries with different technologies in China are competing directly with Mexican exports in the US market. The main pitfall of the model was the lack of supplier's development and the heterogeneous nature of businesses; the consequence was production disintegration, which led to a continuous rise of the import coefficient increasing the dependence for foreign investment to finance foreign exchange demand. Nevertheless, there are some regional cases that show evolution in terms of local development and industrial upgrading.
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