Volume 44, Number 174,
July-September 2013
Manufacturing Entrepreneurship
and Development in the Mexican States
Martín Ramírez Urquidy, Manuel Bernal and Roberto Fuentes
METHODOLOGICAL AND EMPIRICAL ASPECTS

Data on Business Structure, Entrepreneurial Capacity and Economic Development in the Mexican States

This research uses information describing the Mexican states, taken from the inegi (National Statistics Institute) economic censuses of 2004 and 2009, as well as the Mexican Institute for Competitiveness (imco). According to the most recent economic census, 4.72 million economic enterprises or companies were registered in 2008. That number is 61% higher than those registered in the 2004 economic census. These enterprises are categorized by size, where 95% are micro-enterprises, 4% are small, 0.8% are medium-sized and 0.2% are large. This breakdown is similar to 2004, meaning there have been no significant changes in the percentages, but rather in the absolute values (inegi, 2004 and 2009). Data from the 2009 economic census shows that in 2008, the commerce sector accounted for 50% of enterprises, the services sector corresponded to 36.3% and the manufacturing industry to 11.7%. In other words, these three sectors made up 98% of the nation’s enterprises.

Similarly, these businesses accounted for nearly 90% of employed individuals, with the services and commerce sector taking up a large share, while the participation of the rest of the economic sectors was relatively low. However, the manufacturing industry accounted for 53.1% of the total value of gross production, nearly three times the amount for the service sector and four times the figures for mining and commerce, confirming the importance of manufacturing as a motor of economic growth.

Even so, the importance of manufacturing in terms of production is not reflected in the number of micro-enterprises, as the weight of these enterprises is 92%. This means that only 8% of companies have 10 or more employees. The participation of micro-enterprises in services and commerce is 95% and 97%, respectively, meaning that only 5% and 3%, respectively, of companies have 10 employees or more. This is significantly lower than in manufacturing.

The above demonstrates that the manufacturing sector has less favorable entry conditions than other sectors, as it requires greater investment and taking advantage of a higher-level scale. In addition, manufacturing requires broader markets than other sectors. This explains the greater share of this sector in aggregate value and its link with development.

The state data reveals a relationship between development level, business structure and a measure of entrepreneurial capacity. This analysis uses two measures of the level of development: gdp per capita (gdppc) and state competitiveness measured using the state competitiveness index (ic) of the imco. The business structure is defined in two ways. First, the manufacturing industry is divided into enterprises with 0-2, 3-10 and more than 10 employees. Then, an ic component known as economic sectors with potential is included, which contains variables that reflect the state entrepreneurial capacity indicator (ice), encompassing business capitalization, human capital, leadership, innovation and other factors.

Table 1 presents the gdppc, ic, ice and the proportion of companies in the range of 0-2, 3-10 and more than 10 employees. It also presents a measure of deviation between the ic an the ice, where 0 indicates that the entity in question scores equally on general competitiveness (ic) and entrepreneurial competitiveness, as measured by the ice. Positive values indicate a better score on entrepreneurial capacity with respect to overall competitiveness. If the states are ranked from the highest to lowest level of development, based on their ic, this table shows the differences in development. The states Mexico City, Nuevo León, Baja California, Aguascalientes, Querétaro, Coahuila, Baja California Sur, Tamaulipas and Sonora rank in the top ten in terms of development level according to the state competitiveness index.

Nine of the 10 most developed states have similar levels of overall competitiveness (or development) and entrepreneurial capacity, as the deviations are 0 or are close to 0. This indicates that development in these states goes hand in hand with their entrepreneurial sectors. At least half of the states are in this type of situation. Of the top 10, Aguascalientes has lower entrepreneurial development than what its overall competitiveness would suggest. In the rest of the states, Nayarit, Sinaloa, Michoacán and Guanajuato rank relatively low in entrepreneurship as compared to the competitiveness of the state. The opposite occurs in mid-range developed states, where some have a relatively stronger entrepreneurial sector, such as Quintana Roo, Morelos, State of Mexico, Puebla and Tlaxcala.

Table 1 data also presents other analytical dimensions in Figures 1, 2 and 3, where the states are ranked based on their levels of development as measured by the 2008 gdppc and ic. States closer to the origin have lower development (lower gdppc or ic), while those farther away have higher development (higher gdppc or ic). There is also a trend line on each figure to define the relationship between development and business structure by size of enterprise and entrepreneurial capacity as measured by the ice.

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PROBLEMAS DEL DESARROLLO. REVISTA LATINOAMERICANA DE ECONOMÍA, Volume 49, Number 194 July-September 2018 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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