Private Participation in Local Development Evidence from the Mexican Energy Sector

Abstract

Large infrastructure projects in sectors such as energy, transport, tourism, mining and telecommunications, are key to economic growth and development. However, their role is now evolving towards active participation, promoting local development of the communities where they operate, mainly through social responsibility initiatives. Since the 2013 energy reform that opened the Mexican sector to private investment, the country has developed several energy infrastructure projects. Due to its nature and extension, the construction of gas pipelines was one of the most relevant for the communities. Using a difference in difference approach, this paper seeks to determine whether the construction of gas pipelines as part of the Comprehensive Natural Gas Supply Strategy generated benefits for communities, particularly in terms of local employment. From a policy perspective, my results provide empirical evidence that question the overly optimistic positive role of private sector involvement for the developing agenda in the Mexican context.