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ABSTRACT
This research examines strategies to enhance technology transfer from foreign companies to local businesses in
Mexico to boost income and employment. Despite significant foreign direct investment (FDI), Mexico has seen
limited improvements in wages and high-skill job opportunities. The study will find solutions to identified problems
including the dominance of foreign firms, which contribute to these challenges. Using a combination of qualitative
and quantitative methods, the research will collect data from 15 local and foreign companies, focusing on patent
purchases, staff qualifications, and intellectual property charges. A Structural Equation Model (SEM) will be used to
analyze the relationships between education, human capital, and firm performance in facilitating technology
transfer. The findings will inform policy recommendations to improve local productivity, wages, and Mexico's
competitiveness in the global economy.
KEYWORDS
JEL
Codes:
O33,
F23,
F21,
O40,
O47,
J31,
E24,
J21.
INTRODUCTION
In this research, a study will be conducted to analyze
the means through which technology transfer can be
effectively and optimally achieved to ensure that local
companies in Mexico attain a higher level of
Research Article
STRATEGIES TO ACHIEVE TECHNOLOGY TRANSFER FROM FOREIGN
COMPANIES TO LOCAL COMPANIES IN MEXICO TO INCREASE REAL
INCOME AND EMPLOYMENT
Submission Date:
October 30, 2024,
Accepted Date:
November 04, 2024,
Published Date:
November 16, 2024
Crossref doi:
https://doi.org/10.37547/ajsshr/Volume04Issue11-12
Omolara Adebimpe Adekanbi
Universidad Autónoma de Ciudad Juárez, Mexico
Journal
Website:
https://theusajournals.
com/index.php/ajsshr
Copyright:
Original
content from this work
may be used under the
terms of the creative
commons
attributes
4.0 licence.
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productivity, the capacity to compete in the industrial
market and to become key players in the global
market. More importantly, a major target is to ensure
an increase in the income level of the populace in
Mexico while generating more employment and
elevating the citizens above the designation, job
positions, duties and/or activities to which many are
currently assigned or within the limit of their skillset
and technological knowledge.
Several studies (Enrique, 2013; Garriga, 2017) have
reached conclusions and reported an inverse
relationship between wages and foreign direct
investment in Mexico –sometimes marginal increase
in low skill and no statistical effect on high skilled
employees as reported in a study by Saucedo et al
(2020) – since the bulk of the highest earning
companies are high tech foreign companies that hire
cheap labour in Mexico and have sufficient funds for
capital-intensive
production
while
concurrently
applying
innovations
and
rapidly
changing
technologies.
Manufactured exports are a major export-oriented
strategy in Mexico with significant exports that
contribute substantially to its economy. The exports
encompass a wide range of goods, including
machinery and transport equipment, steel, electrical
equipment, chemicals, food products, and petroleum
products. Notably, approximately four-fifths of
Mexico’s petroleum production are being constantly
exported to the USA.
Hence, the trade relationship between Mexico and
USA is crucial to both countries as evident
in the NAFTA deal which started on January 1, 1994,
which expanded export activities such that in 1995,
Mexico's gross domestic product (GDP) stood at $250
billion, constituting approximately 3.2 percent of the
North American economic economy. In contrast,
Canada's economy, valued at $569 billion, made up a
significant 7.3 percent of the total, while the United
States represented GDP of $6,952 billion, contributed
the remaining substantial share of 89.5 percent to the
overall North American economy (United Nations
Development Program 1998, 182, 204, as cited in
Cameron & Brian, 2002).
Currently, there are approximately 18,000 US
companies in Mexico, and these include chemical
industries,
electronic
companies,
automobile
companies, industrial and construction material
producers, transport, retail and wholesale, mining and
quarrying industries. Other major foreign companies
originate from Germany, Spain, Japan, and Canada.
Some other investing countries include China and
Russia. A surge in the influx of Information,
Communication and Technology –ICT companies has
been recorded around 2000. According to World Bank
data, foreign investment net inflow is 38.59 billion in
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Mexico as of 2022. However, a reduction in the ICT
service exports is observed, falling from 10.1% in 2000
to 2.3% in 2022 and this indicator represents computer
and telecommunications, information services, postal
and courier services, and information services.
In spite of the profile of Mexico as a viable
environment for FDI, the income per capita has not
received sufficient boost rather, minimum wage has
been restricted to maintain the comparative
advantage of cheap labour which appears to be the
only negotiation power of Mexico. The possibility of a
connection between this situation and the rate of
tertiary education attainment along with skillsets
cannot be ruled out. Also, determining the rate of
technology transfer by the level of charges on
intellectual property in Mexico is pertinent to drawing
accurate conclusions.
Regardless, the ultimate goal of this research is to
unravel other bargaining powers through which
Mexico can strike better deals in the trading
relationship with high income countries. Discussions
on several factors necessary to achieve this goal will
be found in the literature review such as the
educational profile of Mexico. What are the market
incentives in Mexico currently, are exports from local
companies in Mexico higher skill content and
technology content? When did Mexico start growing
at a higher acceleration and what is the performance
of rural township and village enterprises as well as
their nature if they exist? The literature review will
present the answers to these questions including the
topic of agglomeration in Mexico which is an
important prerequisite for technology diffusion and
industrial growth.
The discussions will be connected to existing studies
and writings on China – an outstanding model of a
country that accomplished the goal of technology
transfer, experienced increase in individual income
and ramped up the attainment of education and skills
along with reforms and industrial policies that
encouraged diffusion of technology and large-scale
production.
Problem Statement
This section discusses the economic issues that this
research aims to address through solutions and
recommendations. These issues include low wages
and limited job advancement, the crowding-out effect
of foreign companies on local businesses, the
reluctance of foreign companies to invest further in
the local environment, and the Mexican government’s
laxity in promoting knowledge transfer.
a). Low Wages and Cadre
Workers in Mexico earn low wages in spite of the
presence of foreign companies when compared to
countries such as USA and China. A disproportionate
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percentage of workers roughly 54.5% or more are
working in low skill jobs.
According to the Mexico data, the official website of
the Mexican government on economic statistics,
workers in Mexico earn an average monthly salary of
MXN3580 pesos –an equivalent of US$211.22 (1 peso =
0.059 US dollars), the equivalent using Purchasing
Power Parity conversion rate (PPP) is US$344.98 in
2023. In contrast to the United States where the
Median weekly earnings of full-time workers were
$1,100 in the second quarter of 2023 according to the
US labour statistics data. Average monthly salary in
Texas, a border state to Mexico is US$ 4775.
Moreover, low skill jobs account for more than 30% of
the workforce in Mexico which is disproportionately
higher that the percentage of workforce employed as
ICT specialists, electricians, engineers, scientists,
researchers, and all other groups who are the most
relevant group for the diffusion of technology and
application in production. This category forms
approximately 3.89%. Besides, there is a possibility
that workers with the right qualifications are working
in different job fields due to scarce hiring
opportunities.
b). Competition against Local Companies
Foreign companies with established production and
distribution techniques, along with a steady flow of
funding to maintain capital intensive production or
expansion have the tendency to compete effectively
against local companies that have only recently
acquired factors of production and technology
transfer through available means. With the capacity to
produce high quality goods and capital to maintain
large scale production, the competition for the
consumer market will be a landslide as well as the
factor market through which supply of materials as
well as resources for production are purchased.
c). Capital Flight
Foreign investors are highly likely to send their profits
back to their originating countries in form of savings.
Basically, they can make any decisions with their
profits such as purchasing new technology from
research centers and teams with which they can
create joint ventures, paying for licensing agreements
and partnerships in any other location. Moreso,
profits can be used to boost the wages of workers in
their homeland companies rather than investing them
in Mexico or increasing employment and income.
d). Insufficient efforts to ensure technology transfer
by the Mexican government
A publication by the Secretaría de Economía confirms
that the government has only recently started gearing
efforts towards revamping the curricula in the
relevant areas of study, creating specialties according
to types of industries that bring investments into the
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currently to ensure supply of required talent
(Secretariate de Economia, 2023).
Existing strategies such as the linking of universities to
companies set up by the government may have
inherent problems as pointed out by Puerta-Sierra
&Jasso (2020); reasons such as organizational factors
deter desirable outcome because researchers
observed a poor management of knowledge and
technology transfer. They reported insufficient
information about the functions of the Technology
Transfer Office (TTO) relating to the commercial value
of research output and licensing, and intellectual
property rights.
Furthermore, other negative factors reported by
researchers that impede a concrete partnership with
the industries are the lack of internal and external
funding and bottle neck bureaucracy, geographical
distance among other factors.
1.3 Research Questions
The research aims to explain how income growth can
be achieved by optimizing the presence of foreign
corporations in Mexico and to identify Mexico's
potential and to find the leverage Mexico can employ
to strike better deals for technology transfer.
I.
Is the level of education and skills among the
Mexican labour force sufficient to attract higher
wages in high tech companies?
II.
What is the existing rate of technology
transfer between Mexico and foreign companies
based on the account of charges on intellectual
property?
III.
What other bargaining leverages can be
explored to attain higher technology transfer to local
companies in Mexico?
1.3 Objectives
General objective of this study is to detect the factors
contributing to the stagnation of wage growth in the
presence of foreign corporations in Mexico and to
identify Mexico's potential negotiation strengths to
facilitate technology transfer from foreign companies.
I.
To determine if the current skillset and
education attainment in Mexico is sufficient to attract
higher wages in high tech companies.
II.
To
ascertain,
through
qualitative
and
quantitative analysis, the current rate of technology
transfer between local companies and foreign
companies in Mexico based on the charges on
intellectual property in Mexico.
III.
To identify more efficient leverages with
which Mexico can negotiate for faster transfer of
technology to local companies, students, and
workforce in the country.
1.4 Hypothesis of Study
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H0 : The rate of charges for the use of intellectual
property payments and receipts does not imply the
progress of technology transfer in Mexico.
HA: The rate of charges for the use of intellectual
property payments and receipts imply the progress of
technology transfer in Mexico.
1.5 Justification of the Study
A number of countries that have developed through
the inflow of foreign direct investment have
undergone the process of rural to urban migration
sector as described by the Lewis Two Sector model,
however, a significant rise in wages have occurred.
According to Todaro & Smith (2015), before the 1980s,
an important feature of urban job markets and how
wages were set in nearly all developing nations was
the consistent increase in wages.
This increase occurred over time, and it was both in
terms of the actual wage amounts and in comparison
to the average incomes in rural areas. This trend
persisted even as the number of people unemployed
in the modern sector was rising, and agricultural
productivity in rural areas remained stagnant or
declined. Institutional factors, such as the strength of
labour unions, the wage levels in the civil service, and
the hiring practices of multinational corporations,
tended to offset the influence of competitive market
forces in the labour markets of the modern sector in
developing countries.
However, foreign direct investment has, although
grown increasingly since 1975 in Mexico and the
presence of many Maquiladoras is a proof of the
establishment of manufacturing plants and factories,
a large percentage of Mexican workers remain low-
income earners or occupy low rank job positions in
these establishments.
In addition, charges for the use of intellectual
property have grown over the years from US$280
million in 2012 to US$1.71 billion in 2022 according to
World Bank data; this increase could signify an
increase in technology transfer or in the value of the
intellectual property acquired by local companies. If
adequate technology transfer is occurring, there
should be a direct impact on the output and exports
from local companies, also on the capacity of such
local companies to hire more labour either low or high
skill with an observable impact on wages. However,
this impact and benefits are not clearly observable in
the economy of Mexico. Therefore, a thorough
investigation is necessary to ensure concrete growth
and development is truly occurring in Mexico.
Local companies in Mexico have not exhibited
adequate absorption of technology, innovation and
techniques, the capacity to compete globally at a
close level with reputable companies that command a
large share of the global market. This should be a
cause for concern based on the profile of Mexico as a
country with a commendable level of competitiveness
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in regard to the presence of infrastructure, accessible
roads, electricity among others.
Therefore, it is imperative to create strategies
through which Mexico will experience the full benefits
of foreign direct investment rather than the
disadvantages such as capital flight.
LITERATURE REVIEW
In this section, discussions are presented on the
current characteristics of the labour force of Mexico;
the population of individuals who are economically
active and participate in labour. Characteristics such
as level of education attainment, category of
occupation and level of income (wages). As the
research progresses, the discussion on Intellectual
Property Protection (IPR) law in Mexico and the
effectiveness of its enforcement.
Previous works in the topic of technology transfer
such as Branstetter, Fisman and Foley (2006) on how
IPR law reforms could be a determinant factor in
encouraging foreign multinational to transfer patents
and more trade secrets to local companies and even
invest more in Research and Development (R&D) and
sell the knowledge off to local companies in turn. The
study covered 16 countries that implemented IPR
reforms between 1982-1999. It also tried to unravel
the questions surrounding how changing prices of
patents might not represent the volume of
technology transfer and therefore incorporated
spending of parent companies on R&D in the
regression analysis.
Further discussions will entail the experiences in
countries that rapidly achieved growth and
development through technology transfer with
emphasis on China as a case study.
2.1 Labour force participation and Structure in
Mexico
Efforts have been made throughout the past years by
the Mexican government to boost education, skill
acquisition and vocational training for the purpose of
achieving growth such that government expenditure
on education between 1970 to 2018 reached a peak at
$US69.19 billion in 2014 for all levels of education and
by 2016, a significant rise in tertiary enrolment
occurred at 27% rate of increase, secondary enrolment
increased by 5.6% but primary enrolment reduced by -
2.4%. The outcome of primary, secondary and tertiary
in the labour market in Mexico can be seen in the
number of labour force participation among the three
levels of education attainment on Fig. 2 and the data
obtained from the World Bank on the value added to
gross domestic product by the various sectors of the
economy in Mexico on Fig. 1; the industry, agricultural
and service sector shows that the service sector
contributes the largest part of Mexico’s GDP.
Fig. 1
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Source: author, data compiled from World Bank
As shown on Fig. 2, individuals with secondary education comprises the largest portion of the labour force while Fig.
3 indicates that the service sector is the highest employer of labour and this infers that a large portion of secondary
school holders are employed in the service sector as well as other sectors and generate a large portion of the GDP
and hence, GNI.
Fig. 2
Source: author, data compiled from International Labour Organization, 2022.
0
20
40
60
80
100
120
VALUE ADDED BY SECTORS AS PERCENTAGE OF GDP
SERVICE SECTOR %GDP INDUSTRY SECTOR %GDP AGRIC. SECTOR %GDP
0.0
10000.0
20000.0
30000.0
40000.0
50000.0
60000.0
70000.0
LABOUR
FORCE PARTICIPATION BY EDUCATION LEVEL
ADVANCED*
INTERMEDIATE**
BASIC***
LESS THAN BASIC****
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*Advanced:
first stage of tertiary education (not leading directly to an advanced research qualification) and Second
stage of tertiary education (leading to an advanced research qualification).
**Intermediate:
upper secondary education.
*** Basic:
Lower secondary (or second stage of basic education) and primary education (or first stage of basic
education).
****Less than basic:
No schooling and pre-primary education.
Fig. 3
Source: author, data compiled from World Bank website.
Regardless of the analysis above, based on the latest
report on monthly wages of Mexico workers in the
second quarter of 2022, the highest earners among
workers fall into the category of Directors of
Surveillance and Security Services followed by
Directors and Managers in Health Services, Civil
Protection and Environmental with a monthly wage
(Mexican pesos) within the range 32400≥W≥26400,
they form only 0,05% of the total workforce and are
perceived or expected to have attained tertiary
education.
The next group of high earners fall within the range
25800≥W≥24800 and comprises of Supervisors,
Artisans and Workers in the Processing and
Manufacture of Metal, Workers in Renting Movables
(Crockery, Movies, Video Games, Etc.), Directors and
Managers in Construction, Repair and Maintenance,
they compose the 0,073% of the workforce and are
0
20
40
60
80
100
120
EMPLOYMENT BY SECTOR
AGRICULTURAL SECTOR
INDUSTRY SECTOR
SERVICE SECTOR
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likely to be a mixture of secondary and tertiary
education holders.
The third group of high earners are Brass workers,
Painters and Metal Cobreros, Agronomists, Funeral
Directors and Managers and other Services, Directors
and Managers in Research and Technological
Development,
Appraisers,
Auctioneers
and
Auctioneers and are within the range 21020
≥W≥18000. This group is clearly a juxtapose of people
with advanced education, secondary, primary and
people with no schooling at all.
The fourth group falls within the range of 17000
≥W≥13000 and the occupation in the category include
Assistants and Technicians in Construction and
Architecture, Electrical Engineers, Technicians in the
Installation, Repair and Maintenance of Refrigeration
Equipment, Climates and Air Conditioning, Installers
of Insulating Material, Waterproofing, Glass and other
Materials, Support Workers in the Electrical Industry,
Electronics and Communications, Supervisors of
Electrical
Technicians,
Electronic
and
Telecommunications
Equipment
and
Electromechanical, Industrial Engineers, Supervisors
and Workers in Personal Care and Household,
Coordinators and Department Heads in Museums,
Cinemas, Sports and Cultural Services (Data Mexico,
2022). The group is likely to be comprised mostly of
people with vocational education, also people with
secondary and tertiary education. The job roles are in
many cases carried out by individuals who have
attained tertiary education but work in the same
capacity as individuals with secondary education.
The full details of the categories and monthly wages
of all categories of workers can be found on the link
Monthly Wages of Workers by Category, 2022 Q2. The
summary of monthly wages in Mexican pesos of
occupations across various categories are shown on
Table
1.1.
Table 1.1 Average Monthly Wages Among Categories of Occupation in Mexico
Category
AAAW
CW
IMOADTD
ODH
PT
TESSA
WALFHF
WESA
WPSS
Mean
Mean
Mean
Mean
Mean
Mean
Mean
Mean
Mean
Monthly
Wage
5952,09
8030,31
6693,36
10829,32
8289,45
7607,60
5754,10
5951,53
6908,22
Percentage
0,0080
0,0003
0,0016
0,0009
0,0022
0,0032
0,0003
0,0119
0,0209
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IMOADTD => Industrial Machinery Operators, Assemblers, Drivers and Transport Drivers, Source: author, data
compiled from Data Mexico, 2022
WALFHF => Workers in Agriculture, Livestock, Forestry, Hunting and Fishing
TESSA => Traders, Employees in Sales and Sales Agents
AAAW => Administrative Activities Auxiliary Workers
WESA=> Workers in Elementary and Support Activities
ODH =>Officers, Directors and Heads
PT=> Professionals and Technicians
CW => Craft Workers
The
deduction
from
the
illustrations
and
categorisations above is that there is no clearly
defined or distinguished difference in the wages
earned by tertiary workers and the job roles of
tertiary education holders in comparison to primary
and secondary education holders.
The literature review will be expanded further to
include various empirical results in previous studies as
the research continues.
THEORETICAL REVIEW
The related theories are classified under the
endogenous growth model which includes a set of
theories developed by various proponents. These
theories outline the interactions among different
production factors to facilitate increased output. In
this context, output is synonymous with economic
growth. Notably, human capital, considered as an
integral part of this growth, has played a pivotal role
in the countries under examination. Within the
endogenous growth model, economic expansion
hinges on the specific characteristics of the economic
environment. This framework takes into account
sustained technological advancements and increased
productivity. Without these two crucial factors, the
growth trajectory would eventually encounter
limitations due to diminishing returns on capital and
labour.
One illustrative example is the AK paradigm, which
emphasizes that to maintain high growth rates, a
substantial portion of GDP must be saved. These
savings are then channelled into funding further
technological
progress,
thereby
accelerating
economic growth (Aghion & Howitt, 2009).
Romer's (1990) product-variety model, is an
“innovation-based”
growth
model,
in
which
innovation fosters productivity growth by introducing
new product varieties, even if these varieties may not
necessarily represent improvements over existing
ones. This paradigm evolved from the emerging field
of international trade theory and underscores the
significance of technology spill overs.
In the model, the degree of product variety
represents the economy’s aggregate productivity
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and its growth rate signifies the per capita output
growth in the long run within the economy. A higher
degree of product variety enhances the economy's
capacity for production because it permits the
allocation of a fixed capital stock across a greater
number of applications. Each of these applications
experiences diminishing returns over time. Therefore,
an increase in product variety is the key driver that
sustains growth in this framework.
The emergence of new product varieties, essentially
innovations, results from investments in research and
development (R&D) made by entrepreneurial
researchers. These individuals are incentivized by the
potential for long-lasting monopoly profits should
their innovations prove successful.
In the Schumpeterian Model, each intermediate
product is exclusively produced and sold by the latest
innovator. When an innovator succeeds in a certain
sector , they enhance the technology parameter,
displacing the previous product until the next
innovator takes its place. As a result, one of the
primary implications of the Schumpeterian paradigm
is that faster economic growth typically leads to a
higher rate of firm turnover. This dynamic process,
known as creative destruction, involves the entry of
new innovators and the exit of previous ones.
In this model, innovation depends on two main inputs:
private expenditures made by potential innovators
and the stock of innovations from past innovators,
which constitutes the publicly available knowledge
base
for
current
innovators.
This
theory
accommodates
different
scenarios
for
the
contribution of past innovations. It can represent
cases where an innovation significantly advances
existing technology or cases where innovation
catches up to the global technology frontier, which
represents the global technological knowledge
available to innovators in all sectors and countries. In
the latter case, the innovation typically involves
implementing or imitating technologies developed
elsewhere.
Schumpeterian theory recognizes that the growth
effects of various policies are context-dependent, as
innovations can interact differently based on country-
specific factors. It provides a framework to analyse
how a country's growth performance is influenced by
its proximity to the technological frontier, how it
tends to converge toward that frontier, and what
policy changes are necessary to sustain convergence
as the country approaches the frontier. However,
Schumpeterian
theory
determines
innovation
frequencies endogenously by considering the profit-
maximization
problem
faced
by
prospective
innovators. This problem and its solution depend on
institutional characteristics of the economy, such as
property rights protection, the financial system, and
government policies. Moreover, the equilibrium
intensity and mix of innovation often rely on
institutions and policies, with variations based on the
country's distance from the technological frontier.
In the Lewis model, an underdeveloped economy is
divided into two sectors: a traditional, densely
populated rural sector where labour has zero
marginal productivity, meaning that labour can be
withdrawn from this sector without affecting its
output, and a modern, high-productivity urban
industrial sector where labour from the rural sector
gradually transitions. The main focus of this model is
on the process of shifting labour and the growth of
output and employment in the modern sector, which
we'll refer to as the "industrial" sector for brevity. The
movement of labour and growth in the industrial
sector are driven by its output expansion.
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The rate at which this expansion occurs is determined
by the level of investment and capital accumulation in
the modern sector, made possible by the surplus of
profits over wages, assuming that capitalists reinvest
all their profits. Additionally, Lewis assumed that
wages in the urban industrial sector remain constant
and are set as a fixed premium above a standard
subsistence wage level in the traditional agricultural
sector. The model also posits that the supply of rural
labour to the modern sector is perfectly elastic at this
constant urban wage.
However, when we consider factors such as the
labour-saving nature of modern technology transfer,
significant capital flight, the decreasing presence of
surplus labour in rural areas, the growing surplus
labour in urban settings, and the tendency for wages
in the modern sector to rise rapidly even in the
presence of substantial open unemployment, we
must recognize that the Lewis two-sector model,
while useful in illustrating early development
processes, requires significant adjustments in
assumptions and analysis to align with the realities of
most contemporary developing nations (Todaro &
Smith, 2015).
METHODOLOGY
Scope of the Study
This study focuses on both local and foreign
companies operating in Mexico City, one of Mexico's
primary business hubs. The city hosts a wide range of
foreign brands across various sectors, including
automotive, confectionery, medical technology, and
hospitality. The parent companies are from highly
developed regions such as the United States, Spain,
Japan, and China. The number of registered foreign
companies in Mexico City is at least 844 while
Mexican companies with foreign investment in their
share capital as of August 23, 2024, is recorded to be
over 3,145,507. The website Data Mexico accounts for
193, 423 small businesses in Mexico City.
Covering a 13-year period from 2010 to 2023, the study
will compile government policies, laws, and reforms
on Intellectual Property Protection (IPR) relevant to
local and foreign companies in Mexico City within this
timeframe.
The sample size is determined based on the formular:
n =
where n is the ochran’s recommended sample si e
365, is the -score 1. 6, p is the population
proportion 50% or 0.5, ε is the margin of error 0.05,
N is the population size = 844 (foreign companies),
and 3,145,507(local companies).
Hence the sample size of foreign companies for data
collection will be 250.83, while the sample size of local
companies will be 364.96, the total sample size will be
615.7 ≈ 616.
COLLECTION OF DATA
The data collection will be achieved by administering
questionnaires to 251 local companies and 616 foreign
companies in Mexico City. The questionnaires to be
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American Journal Of Social Sciences And Humanity Research
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04
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:
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OCLC
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Publisher:
Oscar Publishing Services
Servi
administered to local companies should gather key
information on various aspects of their operations
and affiliations. Essential data includes details on the
purchase of patents from parent or multinational
companies, such as prices, payments, and the dates of
these purchases. Additionally, information on staff
members in production and IT departments is crucial,
including
their
field
of
study,
professional
certifications, level of education, and source of
education. The questionnaires should also cover
previous salaries within the company, the company’s
profit size, and specific data on affiliated foreign
companies.
For foreign companies, the questionnaires should
focus on similar details regarding staff in production
and IT, specifically their educational background,
certifications, and source of education. It is also
important to gather data on the companies' research
and development (R&D) expenditure, patent sales,
and information about affiliated local companies,
including the year their contract was established.
Collecting these data points will provide a
comprehensive understanding of the transfer of
knowledge, skills, and resources between local and
foreign companies. The survey will cover companies
from the listed industries on Table 4 depending on
accessibility and availability.
Table 1.2 List of Industries
Agriculture
Automotive
Manufacturing
Aerospace
Banking and Finance
Biotechnology
Chemicals
Construction
Consumer Electronics
Energy (Oil and Gas)
Entertainment & Media
Environmental Services Food and Beverage
Healthcare and
Pharmaceuticals
Mining and Metals
Information
Technology (IT)
Internet and E-commerce
Manufacturing
Petroleum Refining
Music and Recording
Retail
Packaging
Textiles & Apparel
Biomedical
Utilities (Water, Gas,
Electricity)
Telecommunications
Automotive Retail
Consumer Goods
Dental Care
Aerospace and Defense
Computer Hardware
Medical Devices
Green Technology
Clean Energy
Financial Services
Environmental
Technology
Forestry and Lumber
Model Specification
The SEM model can be used to analyse how various
factors such as human capital, innovation, education
source, and affiliation with foreign companies
influence company performance and patent-related
activities. Fig. 4 is an illustration of a Structural
Equation Model where there is more than one
dependent variable.
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American Journal Of Social Sciences And Humanity Research
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OCLC
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Publisher:
Oscar Publishing Services
Servi
DEPENDENT AND INDEPENDENT VARIABLES:
Dependent variables in the study (Endogenous):
A.
Profits in local and foreign companies (SoP)
B.
Wages of workforce in local and foreign
companies (CS)
Local Companies:
1. Staff Members:
•
Field of Study (FS): The field of study of staff
members
in
the
production
and
IT
departments.
•
Professional Certificate (PC): Whether staff
members have professional certificates.
•
Level of Education (LE): The educational level
of staff members.
•
Source of Education (SE): The source of
education for staff members (e.g., local
universities, foreign universities).
•
Previous Salaries (PS): The previous salaries of
staff members within their companies.
2. Size of Profits (SoP): The size of profits earned by
local companies.
3. Prices of Patents (PoP): The prices paid by local
companies for patents.
4. Payment on Patents (PoPa): Payments made by
local companies for the use of patents.
Foreign Companies:
1.
Staff Members:
•
Field of Study (FS): The field of study of staff
members
in
the
production
and
IT
departments.
•
Professional Certificate (PC): Whether staff
members have professional certificates.
•
Level of Education (LE): The educational level
of staff members.
•
Source of Education (SE): The source of
education for staff members.
2.
Size of Profit (SoP_F): The size of profit
earned by foreign companies.
3.
ompanies’ Expenditure on R & D (RD): The
expenditure of foreign companies on research and
development.
4.
ompanies’ Sales of Patents (SoP_P): The
number of patents sold by foreign companies.
Hypothetical Pathways and Model Components
Pathways for Local Companies
1.
Educational and Professional Attributes of Staff
Members (FS, PC, LE, SE)
➔
Wages (CS)
➔
Profits
(SoP)
➔
Wages (PS, CS) Patent Purchase-
Related Factors (PP, PoP, PoPa, DoPP) Patent
Payments (PoPa).
2.
Educational and Professional Attributes of Staff
Members (FS, PC, LE, SE)
➔
Expenditure on R&D
(RD)
➔
Patent Sales (SoP_P)
➔
Profits (SoP_F)
➔
Wages.
Fig. 4 is an illustration of the structural equation
model for the pathways or interrelationship between
the independent variables and dependent variables.
The lines with arrows and parameter estimates
represent the direct effect of each independent
variable on the dependent variables. The standard
Volume 04 Issue 11-2024
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American Journal Of Social Sciences And Humanity Research
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2771-2141)
VOLUME
04
ISSUE
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P
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:
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OCLC
–
1121105677
Publisher:
Oscar Publishing Services
Servi
software for generating graphic pathways include the
Amos (Analysis of Moment Structures) on SPSS or
Mplus (Keith, 2019). Additional components of the
structural SEM are usually the latent variables (or
disturbances)
in
the
ovals
which
represent
unmeasured variables or unobserved variables that
predict exogenous variables in the model. The paths
beside the ovals simply set the scale of measurement
for the disturbances. Unmeasured variables do not
have a natural scale, hence the scale can be set to any
number but 1 is often used, this will then mean that
the SEM program should set the disturbance to have
the same scale as the other variables.
Lastly, an important aspect of the research will
involve a compilation of laws and reform will be
gathered from government publications and literature
to understand or determine their impacts on the
industrial and service sectors in Mexico.]
Fig. 4 Structural Equation Model
Source: Designed by author
Volume 04 Issue 11-2024
80
American Journal Of Social Sciences And Humanity Research
(ISSN
–
2771-2141)
VOLUME
04
ISSUE
11
P
AGES
:
64-80
OCLC
–
1121105677
Publisher:
Oscar Publishing Services
Servi
CONCLUSION
The proposed research aims to address one of the
critical challenges facing Mexico’s economy: the
limited impact of foreign direct investment (FDI) on
local wage growth, employment, and technological
development. By analyzing how technology transfer
from foreign companies to local businesses can be
optimized, the study will provide valuable insights into
strategies that can elevate Mexico's productivity,
enhance its global competitiveness, and ensure a
more equitable distribution of the benefits from FDI.
This research also seeks to identify ways to reduce the
dominance of foreign companies in key sectors and
promote the growth of local firms through improved
technological
capabilities
and
innovation.
By
investigating factors such as intellectual property
charges, educational attainment, and labour skillsets,
the study aims to offer a framework for policymakers
to enhance bargaining power in trade and investment
negotiations. Ultimately, the findings are expected to
guide Mexico in fostering sustainable economic
growth, boosting real income, and increasing
employment opportunities in high-tech industries.
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