Financial sector and export-led growth: Mexico, 1995-2020

This article seeks to analyze the role of Foreign Direct Investment (FDI) and bank credit to the industrial sector as expansion factors for the productive sector in Mexico from 1995 to 2020. During this period, Mexico was transitioning from an economy with high tariff protection to an open economy, under the generally accepted theoretical postulate that financial repression impeded the free flow of investment. This scenario was unfavorable for an industry that was beginning to reconfigure itself within the framework of a secondary export model. Analysis was conducted using a Markov regime switching model and an Error Correction Vector Model (ECVM). The selected models do not reveal any causal relationship from the financial sector to the real sector or vice versa.