Jose-luis Alvarez-galvan

Liberalization and Retail: the Effects of Foreign Capital on Mexican Retail Jose-luis Alvarez-galvan

This research analyzes the effects of Foreign Direct Investment (FDI) on Mexican retail. To do so, the US company Wal-Mart is studied in relation to its impact on three major Mexican retailers. Over the last twenty years, Mexico's economy has experienced substantial changes. During the 1980s, an Exports-Oriented Industrialization (EOI) model replaced the Imports-Substitution model that Mexico followed for several decades. According to the rationale of the EOI model, FDI should be seen as a key element that provides access to new technology, organizational upgrading and capital to the receiving economy. In sum, FDI has been critical for the Mexican economic model in recent years. For retail, the findings of this research indicate that Wal-Mart's entry into the Mexican market has led to the modernization of the sector. However, Wal-Mart's entry also reinforced the elimination process of many Mexican retailers and suppliers. Crucially, there is no substantial evidence that foreign participation in Mexican retail has triggered significant benefits for the Mexican population in terms of lower prices and better jobs in the industry.