Agglomeration and the location choice of foreign direct investment: new evidence from manufacturing FDI in Mexico
AbstractIn this paper, I estimate conditional logit location models to identify the regional characteristics that influenced the location choice of the large influx of manufacturing FDI into Mexico that occurred in the second half of the 1990s following the creation of NAFTA. The main findings of the analysis are three-fold. First, regional demand, labor costs, labor quality, agglomeration economies and regional distance to Mexico City and the US are all important location factors. Second, findings indicate that the location decision of export-oriented firms is not affected by regional demand. Third, I find evidence that agglomeration economies have a spatial dimension.
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Bibliographic InfoArticle provided by El Colegio de México, Centro de Estudios Económicos in its journal Estudios Económicos.
Volume (Year): 27 (2012)
Issue (Month): 1 ()
FDI; location; agglomeration; conditional logit; nested Logit; Mexico;
Find related papers by JEL classification:
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
- O18 - Economic Development, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
- O54 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean
- R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
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