Publication:
Technology and Firm Performance in Mexico

Loading...
Thumbnail Image
Files in English
English PDF (1.79 MB)
395 downloads
English Text (100.31 KB)
63 downloads
Published
2002-02
ISSN
Date
2013-09-10
Editor(s)
Abstract
The author investigates the relationship between a firm's adoption of new manufacturing technology and its performance. A panel database that identifies technological adoption and tracks firms over time allows the use of different measures of firm performance-wages, productivity, net employment growth, job creation, and job destruction. Results show that technology is associated with high firm performance in all these metrics. The effect of new technology on performance is larger for firms located in the north and in Mexico City. This marginal value significantly increased after the 1994 crisis and the North American Free Trade Agreement. Furthermore, technology increased the wage of semi-skilled workers compared with unskilled workers by about 11 percent over seven years.
Link to Data Set
Citation
López-Acevedo, Gladys. 2002. Technology and Firm Performance in Mexico. Policy Research Working Paper;No. 2778. © World Bank. http://hdl.handle.net/10986/15759 License: CC BY 3.0 IGO.
Associated URLs
Associated content
Report Series
Report Series
Other publications in this report series
  • Publication
    The Economic Value of Weather Forecasts: A Quantitative Systematic Literature Review
    (Washington, DC: World Bank, 2025-09-10) Farkas, Hannah; Linsenmeier, Manuel; Talevi, Marta; Avner, Paolo; Jafino, Bramka Arga; Sidibe, Moussa
    This study systematically reviews the literature that quantifies the economic benefits of weather observations and forecasts in four weather-dependent economic sectors: agriculture, energy, transport, and disaster-risk management. The review covers 175 peer-reviewed journal articles and 15 policy reports. Findings show that the literature is concentrated in high-income countries and most studies use theoretical models, followed by observational and then experimental research designs. Forecast horizons studied, meteorological variables and services, and monetization techniques vary markedly by sector. Estimated benefits even within specific subsectors span several orders of magnitude and broad uncertainty ranges. An econometric meta-analysis suggests that theoretical studies and studies in richer countries tend to report significantly larger values. Barriers that hinder value realization are identified on both the provider and user sides, with inadequate relevance, weak dissemination, and limited ability to act recurring across sectors. Policy reports rely heavily on back-of-the-envelope or recursive benefit-transfer estimates, rather than on the methods and results of the peer-reviewed literature, revealing a science-to-policy gap. These findings suggest substantial socioeconomic potential of hydrometeorological services around the world, but also knowledge gaps that require more valuation studies focusing on low- and middle-income countries, addressing provider- and user-side barriers and employing rigorous empirical valuation methods to complement and validate theoretical models.
  • Publication
    It’s Not (Just) the Tariffs: Rethinking Non-Tariff Measures in a Fragmented Global Economy
    (Washington, DC: World Bank, 2025-10-22) Taglioni, Daria; KEE, Hiau Looi
    As tariffs have declined, non-tariff measures (NTMs) have become central to trade policy, especially in high-income countries and regulated sectors like food and green technologies. Although NTMs may serve legitimate goals, they could also sort countries and firms into or out of markets based on compliance capacity and differences in product mix. Documenting recent advances in the estimation of ad valorem equivalents (AVEs), this paper uncovers new patterns of use and exposure of NTMs. High-income countries rely more heavily on NTMs relative to tariffs, while low- and middle-income countries face steeper AVEs on their exports. Firm-level evidence shows that NTMs disproportionately affect smaller firms, leading to market exit and concentration. Poorly designed NTMs can harm productivity and welfare, while coordinated, capacity-aware use can deliver inclusive outcomes. Policy design, transparency, and diagnostics must evolve to reflect the growing role—and risks—of NTMs in a fragmented global trade landscape.
  • Publication
    Monitoring Global Aid Flows: A Novel Approach Using Large Language Models
    (Washington, DC: World Bank, 2025-11-04) Luo, Xubei; Rajasekaran, Arvind Balaji; Scruggs, Andrew Conner
    Effective monitoring of development aid is the foundation for assessing the alignment of flows with their intended development objectives. Existing reporting systems, such as the Organisation for Economic Co-operation and Development’s Creditor Reporting System, provide standardized classification of aid activities but have limitations when it comes to capturing new areas like climate change, digitalization, and other cross-cutting themes. This paper proposes a bottom-up, unsupervised machine learning framework that leverages textual descriptions of aid projects to generate highly granular activity clusters. Using the 2021 Creditor Reporting System data set of nearly 400,000 records, the model produces 841 clusters, which are then grouped into 80 subsectors. These clusters reveal 36 emerging aid areas not tracked in the current Creditor Reporting System taxonomy, allow unpacking of “multi-sectoral” and “sector not specified” classifications, and enable estimation of flows to new themes, including World Bank Global Challenge Programs, International Development Association–20 Special Themes, and Cross-Cutting Issues. Validation against both Creditor Reporting System benchmarks and International Development Association commitment data demonstrates robustness. This approach illustrates how machine learning and the new advances in large language models can enhance the monitoring of global aid flows and inform future improvements in aid classification and reporting. It offers a useful tool that can support more responsive and evidence-based decision-making, helping to better align resources with evolving development priorities.
  • Publication
    The Macroeconomic Implications of Climate Change Impacts and Adaptation Options
    (Washington, DC: World Bank, 2025-05-29) Abalo, Kodzovi; Boehlert, Brent; Bui, Thanh; Burns, Andrew; Castillo, Diego; Chewpreecha, Unnada; Haider, Alexander; Hallegatte, Stephane; Jooste, Charl; McIsaac, Florent; Ruberl, Heather; Smet, Kim; Strzepek, Ken
    Estimating the macroeconomic implications of climate change impacts and adaptation options is a topic of intense research. This paper presents a framework in the World Bank's macrostructural model to assess climate-related damages. This approach has been used in many Country Climate and Development Reports, a World Bank diagnostic that identifies priorities to ensure continued development in spite of climate change and climate policy objectives. The methodology captures a set of impact channels through which climate change affects the economy by (1) connecting a set of biophysical models to the macroeconomic model and (2) exploring a set of development and climate scenarios. The paper summarizes the results for five countries, highlighting the sources and magnitudes of their vulnerability --- with estimated gross domestic product losses in 2050 exceeding 10 percent of gross domestic product in some countries and scenarios, although only a small set of impact channels is included. The paper also presents estimates of the macroeconomic gains from sector-level adaptation interventions, considering their upfront costs and avoided climate impacts and finding significant net gross domestic product gains from adaptation opportunities identified in the Country Climate and Development Reports. Finally, the paper discusses the limits of current modeling approaches, and their complementarity with empirical approaches based on historical data series. The integrated modeling approach proposed in this paper can inform policymakers as they make proactive decisions on climate change adaptation and resilience.
  • Publication
    The State of Global Services Trade Policies: Evidence from Recent Data
    (Washington, DC: World Bank, 2025-10-28) Baiker, Laura; Borchert, Ingo; Echandi, Roberto; Fernandes, Ana M.; Hans, Ishrat; Magdeleine, Joscelyn; Marchetti, Juan A.; Colomer, Ester Rubio
    The economic environment for services trade has changed dramatically over the past 15 years, driven by rapid technological progress that has expanded the possibilities for exchanging services. How has trade policy responded to these changes? How do policy stances in a wide range of service sectors compare across economies? With its unprecedented global coverage, the Services Trade Policy Database and the associated Services Trade Restrictions Index, developed jointly by the World Bank and the World Trade Organization, help address these questions. This paper makes three principal contributions. First, it offers an in-depth discussion of the current state of services trade policies and their differences across 134 economies and 34 services subsectors. Second, the paper reveals how recent (2016–22) changes in policy stances have seen progressive liberalization by lower-income economies but stabilization or even slight policy reversals in high-income economies. This dynamic differs fundamentally from the trend that unfolded after the Great Recession over 2008–16. Third, the paper shows the implications of policy changes over the past six years on services trade costs, and it showcases how the Services Trade Policy Database’s regulatory information can inform trade negotiations, regulatory analysis, and policy making. Alongside these contributions, the paper documents updates to the Services Trade Policy Database’s economy and sector coverage and explains the latest methodological improvements made to the World Bank–World Trade Organization Services Trade Restrictions Index.
Journal
Journal Volume
Journal Issue

Related items

Showing items related by metadata.

  • Publication
    Determinants of Technology Adoption in Mexico
    (World Bank, Washington, DC, 2002-02) Lopez-Acevedo, Gladys
    The author tries to identify the impact of firm-, region-, and industry-specific characteristics on technology adoption by Mexican firms. Cross-sectional and panel data from 1992-99 show that the firms most likely to adopt new technology are large, train workers, have highly skilled workers, are near the U.S. border, and are owned by foreign entities. Also, bigger firms, firms with a large share of highly skilled workers, and firms that train workers, use intensively more complex technologies in their production process.
  • Publication
    Technology and Skill Demand in Mexico
    (World Bank, Washington, DC, 2002-02) Lopez-Acevedo, Gladys
    The author investigates the effects of technology on the employment and wages of differently skilled Mexican manufacturing workers using firm panel data from 1992-99. She analyzes the relationship between technology and skill demand. Findings support the skill-biased technical change hypothesis. She then examines the temporal relationship of technology adoption to firm productivity and worker wages. The author finds that skilled labor increases after technology adoption. And wages of both skilled and semi-skilled workers exhibit markedly increased growth rates compared with the growth rate of low-skilled workers. The results show that investment in human capital improves technology-driven productivity gains.
  • Publication
    Mexico : Technology, Wages and Employment, Volume 2. Technical Papers
    (Washington, DC, 2001-12-13) World Bank
    The report examines two components of new technology adoption by Mexican manufacturing firms. First, it questions which firms, under what circumstances, and performance adopt such technology. To measure performance, productivity wages, and net employment of a firm were used, leading to further questions on whether technological change helps workers - of a certain skill level - disproportionately. Second, it argues that adoption of new technologies happens under the right circumstances, and further reviews which are the firms, and circumstances surrounding the choice of technology. The analysis is based on data from the National Survey of Employment, Wages, Technology and Training (ENESTYC), and the National Industrial Survey (EIA) for 1992, 1995, and 1999. Results largely suggest that performance (including statistics, and measures on job creation, and/or job dislocation), is superior with technology adoption, though it does not imply performance increases in all firms. Rather, the effects of technology vary depending on location, and size of enterprise. Nonetheless, investments in human capital - training in conjunction with technology adoption - increases productivity benefits. In addition, the likelihood for new technologies, also varies markedly by time period, and, the complexity of the technology correlates both with the size, and skill levels of a firm's work force. Policy recommendations include widespread technology know-how, facilitating inter-firm linkages, supported by both government financing to encourage a competitive business environment, and by a continued increase in research and development funding, public as well as private funding.
  • Publication
    Mexico : Impact Evaluation of SME Programs Using Panel Firm Data
    (World Bank, Washington, DC, 2010-01) Tinajero, Monica; Lopez-Acevedo, Gladys
    Unlike social programs targeting individuals, few enterprise support programs have been rigorously evaluated, and existing evaluations have mostly been done in high-income countries such as the United States and Europe. Mexico spends a large share of government resources on small and medium enterprise programs each year. How effective these programs have been in achieving their objectives is unclear. In Mexico, impact evaluations of small and medium enterprise programs are rare, and most are qualitative in nature. This is the first paper evaluating these programs in Mexico using firm-level panel data. The continuous and ten-year panel data -- from the 1994-2005 period -- allow the authors to address selectivity bias and unobserved firm heterogeneity by applying a generalization of differences-in-differences models combined with propensity score matching methods. This study finds evidence that participation in small and medium enterprise programs is associated with improvements in key variables such as value added, gross production, and wages. Furthermore, the study finds evidence that some of the positive effects can take several years to realize. The results also call for streamlining and greater efficiency in Mexico's small and medium enterprise programs.
  • Publication
    Mexico : Human Capital Effects on Wages and Productivity
    (World Bank, Washington, DC, 2005-12) Tinajero, Monica; López-Acevedo, Gladys; Rubio, Marcela
    The authors follow the Hellerstein, Neumark, and Troske (1999) framework to estimate marginal productivity differentials and compare them with estimated relative wages. The analysis provides evidence on productivity and nonproductivity-based determinations of wages. Special emphasis is given to the effects of human capital variables, such as education, experience, and training on wages and productivity differentials. Higher education yields higher productivity. However, highly educated workers earn less than their productivity differentials would predict. On average, highly educated workers are unable to fully appropriate their productivity gains of education through wages. On the other hand, workers with more experience are more productive in the same proportion that they earn more in medium and large firms, meaning they are fully compensated for their higher productivity. Finally, workers in micro and small firms are paid more than what their productivity would merit. Training benefits firms and employees since it significantly increases workers' productivity and their earnings.

Users also downloaded

Showing related downloaded files

  • Publication
    Poverty, Prosperity, and Planet Report 2024
    (Washington, DC: World Bank, 2024-10-15) World Bank
    The Poverty, Prosperity, and Planet Report 2024 is the latest edition of the series formerly known as Poverty and Shared Prosperity. The report emphasizes that reducing poverty and increasing shared prosperity must be achieved in ways that do not come at unacceptably high costs to the environment. The current “polycrisis”—where the multiple crises of slow economic growth, increased fragility, climate risks, and heightened uncertainty have come together at the same time—makes national development strategies and international cooperation difficult. Offering the first post-Coronavirus (COVID)-19 pandemic assessment of global progress on this interlinked agenda, the report finds that global poverty reduction has resumed but at a pace slower than before the COVID-19 crisis. Nearly 700 million people worldwide live in extreme poverty with less than US$2.15 per person per day. Progress has essentially plateaued amid lower economic growth and the impacts of COVID-19 and other crises. Today, extreme poverty is concentrated mostly in Sub-Saharan Africa and fragile settings. At a higher standard more typical of upper-middle-income countries—US$6.85 per person per day—almost one-half of the world is living in poverty. The report also provides evidence that the number of countries that have high levels of income inequality has declined considerably during the past two decades, but the pace of improvements in shared prosperity has slowed, and that inequality remains high in Latin America and the Caribbean and Sub-Saharan Africa. Worldwide, people’s incomes today would need to increase fivefold on average to reach a minimum prosperity threshold of US$25 per person per day. Where there has been progress in poverty reduction and shared prosperity, there is evidence of an increasing ability of countries to manage natural hazards, but climate risks are significantly higher in the poorest settings. Nearly one in five people globally is at risk of experiencing welfare losses due to an extreme weather event from which they will struggle to recover. The interconnected issues of climate change and poverty call for a united and inclusive effort from the global community. Development cooperation stakeholders—from governments, nongovernmental organizations, and the private sector to communities and citizens acting locally in every corner of the globe—hold pivotal roles in promoting fair and sustainable transitions. By emphasizing strategies that yield multiple benefits and diligently monitoring and addressing trade-offs, we can strive toward a future that is prosperous, equitable, and resilient.
  • Publication
    Quantitative Analysis of Road Transport Agreements (QuARTA)
    (Washington, DC: World Bank, 2013-04-13) Tanase, Virginia; Kunaka, Charles; Latrille, Pierre; Krausz, Peter
    Road freight transport is indispensable to international economic cooperation and foreign trade. Across all continents, it is commonly used for short and medium distances and in long distance haulage when minimizing time is important. In all instances governments play a critical role in ensuring the competitive advantage of private sector operators. Countries often have many opportunities to minimize the physical or administrative barriers that increase costs, take measures to enhance the attractiveness and competitiveness of road transport, or generally nurture the integral role of international road freight transport in the global trade logistics industry. Road freight transport is critical to domestic and international trade. It is the dominant mode of transport for overland movement of trade traffic, carrying more than 80 percent of traffic in most regions. Generally, nearly all trade traffic is carried by road at some point. Therefore, the cost and quality of road transport services is of critical importance to trade competitiveness of countries and regions within countries. In fact, road transport is fundamental to modern international division of labor and supply-chain management.
  • Publication
    Global Economic Prospects, January 2025
    (Washington, DC: World Bank, 2025-01-16) World Bank
    Global growth is expected to hold steady at 2.7 percent in 2025-26. However, the global economy appears to be settling at a low growth rate that will be insufficient to foster sustained economic development—with the possibility of further headwinds from heightened policy uncertainty and adverse trade policy shifts, geopolitical tensions, persistent inflation, and climate-related natural disasters. Against this backdrop, emerging market and developing economies are set to enter the second quarter of the twenty-first century with per capita incomes on a trajectory that implies substantially slower catch-up toward advanced-economy living standards than they previously experienced. Without course corrections, most low-income countries are unlikely to graduate to middle-income status by the middle of the century. Policy action at both global and national levels is needed to foster a more favorable external environment, enhance macroeconomic stability, reduce structural constraints, address the effects of climate change, and thus accelerate long-term growth and development.
  • Publication
    World Development Report 2008
    (Washington, DC, 2007) World Bank
    The world's demand for food is expected to double within the next 50 years, while the natural resources that sustain agriculture will become increasingly scarce, degraded, and vulnerable to the effects of climate change. In many poor countries, agriculture accounts for at least 40 percent of GDP and 80 percent of employment. At the same time, about 70 percent of the world's poor live in rural areas and most depend on agriculture for their livelihoods. World Development Report 2008 seeks to assess where, when, and how agriculture can be an effective instrument for economic development, especially development that favors the poor. It examines several broad questions: How has agriculture changed in developing countries in the past 20 years? What are the important new challenges and opportunities for agriculture? Which new sources of agricultural growth can be captured cost effectively in particular in poor countries with large agricultural sectors as in Africa? How can agricultural growth be made more effective for poverty reduction? How can governments facilitate the transition of large populations out of agriculture, without simply transferring the burden of rural poverty to urban areas? How can the natural resource endowment for agriculture be protected? How can agriculture's negative environmental effects be contained? This year's report marks the 30th year the World Bank has been publishing the World Development Report.
  • Publication
    World Development Report 2017
    (Washington, DC: World Bank, 2017-01-30) World Bank Group
    Why are carefully designed, sensible policies too often not adopted or implemented? When they are, why do they often fail to generate development outcomes such as security, growth, and equity? And why do some bad policies endure? This book addresses these fundamental questions, which are at the heart of development. Policy making and policy implementation do not occur in a vacuum. Rather, they take place in complex political and social settings, in which individuals and groups with unequal power interact within changing rules as they pursue conflicting interests. The process of these interactions is what this Report calls governance, and the space in which these interactions take place, the policy arena. The capacity of actors to commit and their willingness to cooperate and coordinate to achieve socially desirable goals are what matter for effectiveness. However, who bargains, who is excluded, and what barriers block entry to the policy arena determine the selection and implementation of policies and, consequently, their impact on development outcomes. Exclusion, capture, and clientelism are manifestations of power asymmetries that lead to failures to achieve security, growth, and equity. The distribution of power in society is partly determined by history. Yet, there is room for positive change. This Report reveals that governance can mitigate, even overcome, power asymmetries to bring about more effective policy interventions that achieve sustainable improvements in security, growth, and equity. This happens by shifting the incentives of those with power, reshaping their preferences in favor of good outcomes, and taking into account the interests of previously excluded participants. These changes can come about through bargains among elites and greater citizen engagement, as well as by international actors supporting rules that strengthen coalitions for reform.