Export growth, foreign direct investment and technological capability building under the maquila model: winding roads, few intersections

Abstract

In the 1980s and 1990s, Central American countries and Mexico moved towards a new growth model based upon the primacy of exports and foreign direct investment (FDI). The existing literature acknowledges that the expansion of international trade and FDI may be an important factor for developing local technological capabilities. However, in Central America and Mexico a fragile relationship between international trade and FDI growth and the development of technological capabilities has been observed, due to the low local content of exports, weak integration of multinational enterprises and local industry, the specialization of exports in the less knowledge-intensive activities of the value chain and weak absorption capacities. Science, technology and innovation policies have been rather passive and followed a linear approach, undermining the potential benefits arising from FDI and international trade. Copyright , Beech Tree Publishing.