Can Mexico attract high-quality FDI in its biotechnology industry?

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This research seeks to understand how Mexico can attract high-quality FDI in its biotechnology industry. Building on Sánchez-Ancochea's (2000a:80) observation that there is little comparative analysis between Spain and Latin American countries despite their similar legal and institutional characteristics, this study uses a most similar systems design methodology to contrast how Spain managed to attract high-quality FDI to become the second country in the world with the most biotechnology firms (OECD 2015, Negroni 2017) with Mexico's difficulty to attract FDI which is not confined in economic enclaves (Gallaher and Zarsky 2007). The study focuses on the largest medical biotechnology industrial cluster in each country: Barcelona in Spain and Mexico City in Mexico. The quality of FDI is measured by analysing its effect on social and economic development. Economic development is measured as spill-overs which increase the productive capabilities of domestic firms.Social development is measured as the creation of sustained employment and is divided into skilled and unskilled jobs. This distinction is necessary given that biotechnology firms hire mostly high-skilled labour and benefit from tax breaks to incentive FDI and R&D. As such, efforts to promote the biotechnology industry in Mexico through FDI may provide limited developmental benefits to the poor and middle class and exacerbate inequalities.This study will use three levels of analysis to explain the differences in the quality of FDI between Spain and Mexico: firm level strategy (micro), industrial policy (meso) and varieties of capitalism (macro). It will contribute to the academic and policy debate over the role of FDI in enabling middle-income countries such as Mexico to develop a dynamic comparative advantage in high-technology industries, as well as the social and economic developmental benefits of FDI in the biotechnology industry. It hopes to provide policy recommendations as to how Mexico can emulate Spain's success in attracting high-quality FDI.