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

The independent variables in models 1 and 2 are given by the natural log of the ic (LnICEit) of state i in period t, to represent the change in level of development, and , representing the size of the manufacturing sector of i in t, measured as the ration between aggregate manufacturing and the total for the state. The model also incorporates binary variables to control for the effects of region and time period. First, the effects of belonging to the northern region of the nation are controlled for, with a value of one for those states. According to Esquivel (2000), this control may be necessary due to the specific development features found along the border with the United States. Similarly, this study controls for the effects of the socioeconomic conditions and interactions of each period by using a binary variable that takes on the value of one for 2008 observations, to separate these from 2003 data.

The parameters associated with models 1 and 2 are the intercept (α), the effect derived from being a northern state (αr), the control for the year 2008 (αt=08), the parameter associated with changes in ic (βIC) and the factor related to changes in the size of the manufacturing sectors of the states (βm). The expectation is that this parameter will be significant to explain the proportion of manufacturing enterprises in the states and their entrepreneurial capacities. It would be reasonable to assume that a larger sector in state economies would explain the proportion of enterprises in that sector. The term μi is a random variable that represents the individual effects of the state and eit is the error term. The assumption is that eit disturbances are not related to the independent variables and have a normal distribution.

The results predicted by the hypothesis are related to the parameter βIC, linked to the level of development represented by the ic. In equation 1, it is expected to be positive for the ic, βIC < 0 for micro-enterprises with 0-2 employees and negative, βIC > 0 for the rest. This would imply that different levels of economic development among the states are negatively associated wit the presence of self-employment micro-enterprises, but positively with the presence of relatively larger enterprises. Similarly, in equation 2, the expectation is that βIC > 0 because the level of development has a favorable impact on entrepreneurial capacities and the average level of entrepreneurship among the states measured by their ice.

This econometric study did not take into account data from the states of Campeche, Tabasco or Mexico City, as they have specific elements that could bias this research. One the one hand, the first two states have the oil industry, which shows up in the gdp per capita but is not related to real levels of development. Similarly, Mexico City is home to the national and international headquarters and corporations of many companies, and operations carried out there reflect out-of-territory results.

Finally, models 3 and 4 were used in another econometric analysis to determine whether there was causality in two directions. First, whether the level of development determines the business structure and entrepreneurial capacity, and/or whether the latter two determine the level of development. Models similar to those used in equations 1 and 2 were estimated, but this time the goal was to explain ic in both cases, with the variables of business structure and entrepreneurial capacity.


i = 1, 2 … 28 and t = 1 and 2


i = 1, 2 … 28 and t = 1 and 2

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PROBLEMAS DEL DESARROLLO. REVISTA LATINOAMERICANA DE ECONOMÍA, Volume 49, Number 195 October-December 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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