The ‘new regionalism’ and foreign direct investment: the case of Mexico

Waldkirch, Andreas

doi:10.1080/0963819032000084313

Cited by 64 publications

(47 citation statements)

References 24 publications

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“…They then decompose the variables used in the general econometric model and use the coefficients to determine the share of Mexican FDI that can be attributed to NAFTA. While the authors note that the results need to be taken as illustrative, they estimate that on average, NAFTA increased FDI in Mexico by around 40% a year since 1994, which is very similar to the 42% estimate obtained by Waldkirch (2003). Further, the World Bank suggests that this figure likely underestimates the actual effect of NAFTA because the agreement is probably correlated with the openness variable present in their model.…”

supporting

confidence: 48%

“…Waldkirch (2003), for instance, uses a firm-level econometric model to study NAFTA's effects on FDI in Mexico during the period 1980-1998. He finds a clear positive effect of NAFTA on FDI in Mexico, and suggests that this positive effect has come almost exclusively from raising investment from Canada and the United States, rather than from other countries wishing to access the NAFTA market.…”

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confidence: 99%

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Analysis of the Economic Impact of Investment Provisions in Regional Trade Agreements

Lesher

Miroudot

2006

OECD Trade Policy Papers

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As countries turn more to regionalism as a means of forwarding co-operation on trade rules and other areas of policymaking, rules on investment are increasingly being incorporated into regional trade agreements (RTAs). We analyse the economic consequences of including investment provisions in trade agreements by creating an index of the extensiveness of investment provisions in RTAs and then using that index in a gravity model framework of trade and investment. The results indicate that investment provisions are positively associated with trade and, to an even greater extent, investment flows. Further, we observe an insignificant effect of bilateral investment treaties on investment flows, suggesting either that substantive investment provisions in RTAs impact trade and FDI flows more profoundly, or that the combination of substantive investment rules and provisions liberalising other parts of the economy jointly impact trade and investment more significantly. The report also includes case studies that confirm that the relationship between investment and other provisions in trade agreements is complex and depends on many factors.

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confidence: 48%

mentioning

confidence: 99%

Analysis of the Economic Impact of Investment Provisions in Regional Trade Agreements

Lesher

Miroudot

2006

OECD Trade Policy Papers

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“…Nevertheless, although Mexico did see an increase in inbound FDI after NAFTA, as Waldkirch (2003) shows, this was the result of increased investment from the U.S. and Canada, not from non-NAFTA countries. Thus, despite the ability to shift production to the low-cost Mexico yet still serve the lucrative U.S. market cheaply, European firms did not react as expected.…”

Section: Fragmentation and Fdimentioning

confidence: 99%

Fragmentation of headquarter services and FDI

Davies

2005

The North American Journal of Economics and Finance

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I develop a simple model in which production of skill-intensive headquarter services are fragmented across borders in order to take advantage of complementarities between types of skilled labor. This setting indicates that FDI tends to come from and go to skill-abundant countries. It also yields an ambiguous effect of FDI on domestic relative wages. If the complementarities between skilled labor types are large enough, then increased FDI increases the wages of both skilled and unskilled labor in the home economy. Thus, this model predicts investment patterns comparable to the horizontal model but requires neither trade barriers nor reductions in home wages. JEL Classification: F16, F23Key Words: Headquarter Services, Fragmentation, Foreign Direct Investment * 435 PLC Building, 1285 University of Oregon, Eugene, OR, 97405; Phone: (541) Fax: (541) 346-1243; E-mail: rdavies@uoregon.edu. All errors are entirely my responsibility.

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“…There is compelling evidence that the agreement has assured investors of Mexico's lasting commitment to reform and resulted in substantially and permanently higher FDI inflows, as documented, for example, in Waldkirch (2003) and Cuevas et al (2005). Moreover, NAFTA has facilitated the evolution of a vertically integrated production network in North America, further changing the composition of FDI from predominantly market seeking to exploiting Mexico's comparative advantage.…”

Section: Introductionmentioning

confidence: 99%

The Effects of Foreign Direct Investment in Mexico Since NAFTA

Waldkirch

2008

SSRN Journal

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Foreign Direct Investment (FDI) into Mexico has increased dramatically since the inception of the North American Free Trade Agreement (NAFTA), raising questions about its effect on the Mexican economy. This paper studies the impact of FDI on industry productivity and wages over the first ten years of NAFTA, paying particular attention to the source country and destination industry of investments. It also offers a detailed description of the evolution of FDI, its components, sectoral composition, and sources from 1994-2005. There is evidence of a positive effect of FDI on productivity, particularly total factor productivity (TFP). The effect on wages is negative or zero at best, suggesting a divergence from productivity over this time period. The positive productivity effect stems largely from U.S. FDI into non-maquiladora industries, which receive over two thirds of manufacturing FDI. There is no evidence that more distant source countries have a differential effect. Consistent with theoretical expectations, FDI into maquiladoras benefits unskilled workers at the expense of skilled workers. This effect may be strong enough to dampen income inequality.

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The ‘new regionalism’ and foreign direct investment: the case of Mexico

Cited by 64 publications

References 24 publications

Analysis of the Economic Impact of Investment Provisions in Regional Trade Agreements

Analysis of the Economic Impact of Investment Provisions in Regional Trade Agreements

Fragmentation of headquarter services and FDI

The Effects of Foreign Direct Investment in Mexico Since NAFTA

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