MAP OF THE DAY: Wal-Mart's Invasion Of Mexico

A new academic paper looks at how Wal-Mart has reshaped Mexican manufacturing, mostly for good:

Walmex provides access to a larger market, but it puts continuous pressure on its suppliers to improve their product’s appeal, and it forces them to accept relatively low prices relative to product appeal. Simulations of the model show that the arrival of Walmex separates potential suppliers into two groups. Those with relatively high-appeal products choose Walmex as their retailer, whereas those with lower appeal products do not. For the industry as a whole, the model predicts that the associated market share reallocations, adjustments in innovative effort, and exit patterns increase productivity and the rate of innovation.

Read the full paper by Leonardo Iacovone, Beata Smarzynska Javorcik, Wolfgang Keller, James R. Tybout at NBER.

From the paper, here are two maps of the invasion:


Don’t miss: 16 Facts About Wal-Mart That Will Blow Your Mind >

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