The impact of competition with China in the US market on innovation in Mexican manufacturing firms | Latin American Economic Review

Using data from 6378 Mexican firms for the 2012–2013 period, this paper estimates the effect of competition with China for the US market on the innovation efforts of the Mexican manufacturing sector. After controlling for the influence of several variables, we find a U-curve shaped relationship between foreign competition (measured by the China effect) and the innovation of Mexican manufacturing firms in products, in processes, and for the world. Given that the quadratic positive effect is much larger than the negative linear effect, we conclude that an Escape-Competition effect dominates when Mexican firms are fighting for a larger market share with China in the US.

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Latin American Economic Review aims to be the leading general interest journal on topics relevant to Latin America. The journal welcomes high-quality theoretical and quantitative papers on economic, social and political-economy issues with a regional focus. Articles presenting new data bases or describing structural reforms within a rigorous theoretical framework will also be considered. A few (illustrative) examples of topics that may be of special interest to this journal include: inflation, informal sector, corruption, crime, drug policy, unions, social exclusion, price controls, energy and environmental policy, natural resources, and technology transfer.

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