Desarrollo industrial, profundización financiera e innovación: un estudio para México

Abstract

Industrial Development, Financial Deepening and Innovation: A Study for Mexico

The aim of this paper is to examine, using a fixed effects panel model, the impact of bank credit, as well as economic openness and technological capital, on the dynamics of added value in 14 manufacturing subsectors of Mexico during the period 2003- 2021. The main findings suggest: i) a positive relationship between credit and manufacturing dynamics, although this effect is marginal; ii) that an increase in exports and foreign direct investment drives economic expansion, especially among dynamic industries; iii) that technological innovation is the determining factor of industrial activity. With this evidence, it is possible to conclude that, despite the deepening of the financial system in Mexico, this process is insufficient for the size and investment requirements of the economy. In this context, a miscellany of policies must be implemented to redefine market incentives that allow optimizing the internalization of the gains associated with banking development. The contribution of the paper lies in analyzing at the economic subsector level the implications of financial deepening on growth.