Volume 44, Number 174,
July-September 2013
Manufacturing Entrepreneurship
and Development in the Mexican States
Martín Ramírez Urquidy, Manuel Bernal and Roberto Fuentes
Econometric Results and Discussion ( ...continuation )

All estimates were statically significant for the parameters representing the intercept 𝛼. The parameter associated to the binary variable that controls the 2008 data (𝛼𝑡=08) was only significant in the 0-2 and 3-10 categories, with the difference being that it was negative for the 0-2 category (αt=08 > 0), while it was positive for the 3-10 group (αt=08 > 0). This suggests that the regression line fell from 2003 to 2008, meaning that on average, the proportion of micro-enterprises of 0-2 employees fell in these states. The opposite happened in the 3-10 category, whose share increased on average or displaced the regression line upwards, suggesting that on average, all of the states saw the proportion of enterprises in this group increase.

The results also shed light on the lack of effect derived from being a state in the northern region of the country, as the associated parameter (αr) was not statistically significant. The parameter estimating the effects of the size of the manufacturing sector on the proportion of companies in each category (βm) presented mixed results. It was not significant for the categories 0f 0-2 and 3-10 employees, but it was for the category of more than 10 employees. This means that the size of the manufacturing sector in each state is able to explain the higher levels of entrepreneurship in local economies, which reflects the fact that the manufacturing sector brings about better conditions to take advantage of economies of scale and optimal economies than other sectors.

The results of equation 1 for all categories are in keeping with the hypothesis regarding the negative relationship between the level of development as measured by the ic for the lower categories, such as 0-2 (βIC < 0) and the positive relationship for higher categories (βIC > 0). This is indicative of the fact that the level of economic development of the states negatively explains the presence of self-employment micro-enterprises, and provides a positive explanation for larger entrepreneurial endeavors. The absolute value of the βIC parameter represents the elasticity of the proportion of enterprises by category given the changes in ic. There are important differences here, as its value is -0.63 for the lower category of 0-2, but 0.39 for the 3-10 category and 1.88 for the top group. This allows us to infer that differences in development, or said another way, in the progress of ic in the states, will reduce the level of micro-enterprises in the 0-2 category and strongly drive the presence of larger enterprises. This is consistent with the concept that higher levels of development lead to better institutional and regulatory environments, human capital and favorable access to factors, among other benefits, reflected in greater entrepreneurial capacity, and compatible with the opening of businesses and higher-scale enterprises.

In equation 2, the only significant parameters were associated with the intercept (α ) and the parameter associated with the level of development measured by the ic (βIC > 0). The temporal, regional and size effects of the manufacturing sector were not significant. The estimate was overall significant as indicated by the Chi2 probability and an overall statistical significance for R2 of 0.55, which ensures a good explanatory capacity. The value of the parameter associated with the ic was high, similar to equation 1, for the category of enterprises with more than 10 employees, with an elasticity of 1.5. This indicates that advances in development levels more proportionally improve the entrepreneurial indicator measured by the ice, and in general, the regional entrepreneurial capacity, which is also in keeping with the proposed hypothesis.

Table 4 presents the econometric results of equations 3 and 4, which were used to determine if there was double causality regarding whether business structures and entrepreneurial capacity impact development. The results of this exercise suggest that the data used cannot sustain this hypothesis.

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PROBLEMAS DEL DESARROLLO. REVISTA LATINOAMERICANA DE ECONOMÍA, Volume 50, Number 196 January-March 2019 is a quarterly publication by the Universidad Nacional Autónoma de México, Ciudad Universitaria, Coyoacán, CP 04510, México, D.F. by Instituto de Investigaciones Económicas, Circuito Mario de la Cueva, Ciudad Universitaria, Coyoacán,
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