Abstract
In this paper, we analyze the importance of private capital in small and medium enterprises (SMEs) in determining the growth of manufacturing productivity and regional development in Mexico. Given SMEs’ current central role in employment, output, and wages, we focus on their productivity and competitiveness by studying regional concentration and spillover effects. We use spatial panel data and a spatial Durbin model to find the direct and indirect effects of capital that depend on the size of the enterprise; we also use information from the economic census and the spatial weight matrices. The results suggest that productivity is boosted by the private capital of SMEs. This study allows us to identify the advantages within each region as well as their strengths and weaknesses according to each productive structure.
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