Advanced Search
MyIDEAS: Login to save this article or follow this journal

North-South Integration and the Location of Foreign Direct Investment

Contents:

Author Info

  • Ayça Tekin-Koru
  • Andreas Waldkirch

Abstract

We investigate how North-South integration affects the location of foreign direct investment (FDI) between the two regions. The theoretical analysis suggests that integration affects the incentives of partner and nonpartner Northern countries to locate in the South differently and may lead to investment diversion from the Northern partner. We test our propositions using data from the North American Free Trade Agreement (NAFTA), the first major North-South integration scheme. We find that NAFTA partner FDI in Mexico has increased since the inception of NAFTA above what is implied by other determinants of FDI and the global upward trend during this time. Other countries have not increased their use of Mexico as an export platform. We also find no evidence that inward US FDI has been diverted. The results are robust to a number of different model and econometric specifications as well as the skill data used. Copyright � 2010 Blackwell Publishing Ltd.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.blackwell-synergy.com/links/doi/10.1111/j.1467-9396.2010.00908.x
File Function: link to full text
Download Restriction: Access to full text is restricted to subscribers.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Article provided by Wiley Blackwell in its journal Review of International Economics.

Volume (Year): 18 (2010)
Issue (Month): 4 (09)
Pages: 696-713

as in new window
Handle: RePEc:bla:reviec:v:18:y:2010:i:4:p:696-713

Contact details of provider:
Web page: http://www.blackwellpublishing.com/journal.asp?ref=0965-7576

Order Information:
Web: http://www.blackwellpublishing.com/subs.asp?ref=0965-7576

Related research

Keywords:

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Bruce A. Blonigen & Ronald B. Davies & Keith Head, 2002. "Estimating the Knowledge-Capital Model of the Multinational Enterprise: Comment," NBER Working Papers 8929, National Bureau of Economic Research, Inc.
  2. Ekholm, Karolina & Forslid, Rikard & Markusen, James R., 2003. "Export-Platform Foreign Direct Investment," CEPR Discussion Papers, C.E.P.R. Discussion Papers 3823, C.E.P.R. Discussion Papers.
  3. Massimo Motta & George Norman, 1993. "Does economic integration cause foreign direct investment?," Economics Working Papers, Department of Economics and Business, Universitat Pompeu Fabra 28, Department of Economics and Business, Universitat Pompeu Fabra.
  4. Ethier, Wilfred J, 1998. "The New Regionalism," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 108(449), pages 1149-61, July.
  5. Markusen, James R., 1984. "Multinationals, multi-plant economies, and the gains from trade," Journal of International Economics, Elsevier, Elsevier, vol. 16(3-4), pages 205-226, May.
  6. Grossman, Gene & Helpman, Elhanan & Szeidl, Adam, 2004. "Optimal Integration: Strategies for the Multinational Firm," CEPR Discussion Papers, C.E.P.R. Discussion Papers 4477, C.E.P.R. Discussion Papers.
  7. James R. Markusen & Keith E. Maskus, 2001. "General-Equilibrium Approaches to the Multinational Firm: A Review of Theory and Evidence," NBER Working Papers 8334, National Bureau of Economic Research, Inc.
  8. James R. Markusen & Keith E. Maskus, 1999. "Discriminating Among Alternative Theories of the Multinational Enterprise," NBER Working Papers 7164, National Bureau of Economic Research, Inc.
  9. Eduardo Fernández-Arias & Mark M. Spiegel, 1997. "North-South Customs Unions and International Capital Mobility," Research Department Publications, Inter-American Development Bank, Research Department 4060, Inter-American Development Bank, Research Department.
  10. Andreas Waldkirch, 2003. "The 'new regionalism' and foreign direct investment: the case of Mexico," The Journal of International Trade & Economic Development, Taylor & Francis Journals, Taylor & Francis Journals, vol. 12(2), pages 151-184.
  11. Andreas Waldkirch, 2004. "The 'New Regionalism': Integration as a Commitment Device for Developing Countries," International Trade, EconWPA 0412004, EconWPA.
  12. David L. Carr & James R. Markusen & Keith E. Maskus, 2001. "Estimating the Knowledge-Capital Model of the Multinational Enterprise," American Economic Review, American Economic Association, American Economic Association, vol. 91(3), pages 693-708, June.
  13. James R. Markusen, 2004. "Multinational Firms and the Theory of International Trade," MIT Press Books, The MIT Press, The MIT Press, edition 1, volume 1, number 0262633078, December.
  14. Bruce A. Blonigen & Ronald B. Davies, 2004. "The Effects of Bilateral Tax Treaties on U.S. FDI Activity," International Tax and Public Finance, Springer, Springer, vol. 11(5), pages 601-622, 09.
  15. James R. Markusen, 1997. "Trade versus Investment Liberalization," NBER Working Papers 6231, National Bureau of Economic Research, Inc.
  16. MacDermott, Raymond, 2007. "Regional trade agreement and foreign direct investment," The North American Journal of Economics and Finance, Elsevier, Elsevier, vol. 18(1), pages 107-116, February.
  17. Braconier, Henrik & Norback, Pehr-Johan & Urban, Dieter, 2005. "Multinational enterprises and wage costs: vertical FDI revisited," Journal of International Economics, Elsevier, Elsevier, vol. 67(2), pages 446-470, December.
  18. Feenstra, Robert C. & Hanson, Gordon H., 1997. "Foreign direct investment and relative wages: Evidence from Mexico's maquiladoras," Journal of International Economics, Elsevier, Elsevier, vol. 42(3-4), pages 371-393, May.
  19. Stephen Ross Yeaple, 2003. "The Role of Skill Endowments in the Structure of U.S. Outward Foreign Direct Investment," The Review of Economics and Statistics, MIT Press, vol. 85(3), pages 726-734, August.
  20. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2002. "How Much Should We Trust Differences-in-Differences Estimates?," NBER Working Papers 8841, National Bureau of Economic Research, Inc.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Waldkirch, Andreas & Tekin-Koru, Ayca, 2010. "North American Integration and Canadian Foreign Direct Investment," MPRA Paper 21482, University Library of Munich, Germany.
  2. Tekin-Koru, Ayça, 2012. "Asymmetric effects of trade costs on entry modes: Firm level evidence," European Economic Review, Elsevier, Elsevier, vol. 56(2), pages 277-294.
  3. Shawn ARITA & TANAKA Kiyoyasu, 2013. "Regional Investment Liberalization and FDI," Discussion papers, Research Institute of Economy, Trade and Industry (RIETI) 13088, Research Institute of Economy, Trade and Industry (RIETI).
  4. Julia Kubny & Florian Mölders & Peter Nunnenkamp, 2008. "Regional Integration and FDI in Emerging Markets," Kiel Working Papers 1418, Kiel Institute for the World Economy.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:bla:reviec:v:18:y:2010:i:4:p:696-713. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.