Externalities from FDI in the Mexican retailing sector [ 1 ]

This contribution to the discussion on FDI impact in developing countries is based on an empirical study of the consequences of transnational corporations’ presence in the Mexican retailing sector, particularly Wal-Mart. First, we show that the arrival of foreign firms accelerates the modernization but has a negative impact on local firms' performance as well as local worker remuneration as a result of the growing competitive pressure in the sector. Second, we show the changes that occurred in supply chain governance and the tremendous increase of imports initiated by Wal-Mart, and suggest some probable implications for local suppliers.