Foreign investment and the global geography of production: Why the Mexicanconsumer electronics industry failed

Explanations of industrial development in late-developing countries have be come narrowly focused on the capability of governments to promote, pressure , or punish nationally-owned firms: Often overlooked is the contribution of firms, both national and multinational, in propelling, coordinating, and d etermining the path and location of such development. This paper examines t he conditions that led to the decline of Mexico's consumer electronics indu stry and presents new evidence to support a more complex account of the rol e of both industrial and state actors within this process. In contrast to the traditional market- or state-based theories, we argue th at the decline of Mexico's consumer electronics industry largely resulted f rom its foreign investment regime, particularly the timing of investment an d the geographical locations of local and foreign manufacturers, and the su bsequent depth and quality of the relationships between these firms. The di fferences between Mexico's regime and that of Taiwan during the same period provide further evidence of the important role that foreign firms play in inserting local suppliers into the global production chain. We argue that M exico's foreign investment regime and the resulting weak local-foreign ties , rather than inadequate state policy, sealed the fate of Mexico's once thr iving domestic electronics industry. (C) 1999 Elsevier Science Ltd. All rig hts reserved.