Can Mexico Set Up in the Aerospace and the Software and IT Global Value Chains as a High-Value-Added Player?

Brown-Grossman, Flor;
Domínguez-Villalobos, Lilia
Nov 2012
This study is an effort to identify the process by which firms venture into GVCs and the obstacles faced by firms once they have been immersed in it. We have focused on two particular GVCs: the aerospace GVC and the software and IT services GVC. Through the case studies, we analyzed the nature of inter-firm linkages and how they affected the potential of scaling up by local suppliers in the value-added chain, the particular role of firms in the value chain in Mexico and the achievements and limitations of governmental policies as tools to facilitate the entrance of MNCs' subsidiaries and to create the conditions for the entrance and scaling up of local firms in the value chain. We found that geopolitical factors were important, in particular NAFTA, but these advantages are only part of explanation for the insertion of Mexican industry in both GVCs. In our opinion, this could not have happened without an effort of public policy at different levels to attain this goal on the part of the Mexican government. Nevertheless, there is a notorious unbalance between efforts to secure investment from foreign firms and certification and long-term financing initiatives. In our view, the latter has not been properly addressed and it is a major problem for the scaling up of local firms in the value chain.