Transnational Learning Capacity and Foreign Investment Promotion in Mexico

• In Event: International Political Economy Virtual Poster Session

Abstract

Low- and middle-income countries increasingly see foreign direct investment (FDI) as an important source of economic development, both due to its direct impacts on employment and via the positive externalities that it generates, such as the transfer of new technologies. High-value added FDI is especially important in terms of producing these benefits, leading governments at the national, state, and local levels to seek such investment. In this paper, we explore investment promotion at the state-level, with attention to Mexico’s states. Our hypothesis is that some state governments are more effective at attracting high-value added FDI, because they have "transnational learning capacity," meaning that they are better able to use their transnational networks and understanding of foreign business trends to target prospective investors. With that in mind, we investigate whether those Mexican states whose investment promotion agencies (IPAs) display a high level of transnational learning capacity are able to attract more high-value added FDI. We do so using an original survey aimed at IPA managers that captures characteristics of IPAs, such as the degree of international representation on their boards of directors. We complement survey data with interviews of select IPA managers, and we also conduct in-depth case studies of several Mexican states.

Authors

• Jonas Gamso, Arizona State University

• Roy C. Nelson

• Ivan Jileta