Introduction:

Foreign Direct Investment (FDI) is considered a source for productivity growth of manufacturing industries in developing countries. Mexico, since the opening of its economy, has facilitated the arrival of foreign companies expecting economic benefits in the form of spillovers. The case of Japanese FDI in Mexico is relevant due to the fact that FDI flows have increased considerably with presence in the electronic industry since the entry into force of the Economic Partnership Agreement in 2015. Previous studies have shown that due to specific characteristics of Japanese FDI, there are positive and relevant impacts for the productivity of different manufacturing industries in different contexts. The objective of this study is the analysis of the productive effects of Foreign Direct Investment (FDI) of Japan on the growth in production of the electronics industry of Mexico during the period from 2000 to 2016.

Method:

The KLEMS methodology was employed as the basis for the econometric model. Two time-series regression models are presented with aggregated data using independent variables related to production factors (national capital, foreign capital, labor, energy, materials and services) to observe their effects on the production of the electronic industry, as a dependent variable. The working hypothesis is: Japanese FDI has a positive and significant effect on production of each of the industrial branches in Mexico’s electronic industry. The first of these models is estimated for the whole electronic industry and the second one analyzes each branch of the electronic industry, both using data from 2000 to 2016. Finally, the results are contrasted with a third model that follows a Cobb-Douglas type of production function with two factors (capital and labor) to compare the results regarding FDI and the productivity effects in the electronic industry and the industrial branches.

Results:

The results indicate positive and significant effects for three of the six branches of the electronic industry analyzed.

Discussion or Conclusion:

From the results obtained, it is concluded that Japanese IED has positive productive effects in the electronic industry’s branches related to computers and peripheral equipment and in audio and video. Under certain specifications additional effects are found in the branch of magnetic and optical equipment. The analysis indicates that the effects of FDI should be analyzed by branch and / or economic class within a particular industry of the recipient country. Likewise, under the KLEMS methodology, there is a strong relationship between the intermediate consumption of production factors, mainly materials, with the growth of the production of this industry.

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