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Migration, Trade, and Foreign Direct Investment in Mexico

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  • Patricio Aroca
  • William F. Maloney

Abstract

Part of the rationale for the North American Free Trade Agreement was that it would increase trade and foreign direct investment ( fdi ) flows, creating jobs and reducing migration to the United States. Since poor data on illegal migration to the United States make direct measurement difficult, data on migration within Mexico, where census data permit careful analysis, are used instead to evaluate the mechanism behind predictions on migration to the United States. Specifications are provided for migration within Mexico, incorporating measures of cost of living, amenities, and networks. Contrary to much of the literature, labor market variables enter very significantly and as predicted once possible credit constraint effects are controlled for. Greater exposure to fdi and trade deters outmigration, with the effects working partly through the labor market. Finally, some tentative inferences are presented about the impact of increased fdi on Mexico--U.S. migration. On average, a doubling of fdi inflows leads to a 1.5--2 percent drop in migration. Copyright 2005, Oxford University Press.

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Bibliographic Info

Article provided by World Bank Group in its journal The World Bank Economic Review.

Volume (Year): 19 (2005)
Issue (Month): 3 ()
Pages: 449-472

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Handle: RePEc:oup:wbecrv:v:19:y:2005:i:3:p:449-472

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Cited by:
  1. Masood Gheasi & Peter Nijkamp & Piet Rietveld, 2011. "Migration and Foreign Direct Investment: Education Matters," Tinbergen Institute Discussion Papers 11-136/3, Tinbergen Institute.
  2. Barba Navaretti, Giorgio & Bertola, Giuseppe & Sembenelli, Alessandro, 2008. "Offshoring and Immigrant Employment: Firm-level Theory and Evidence," CEPR Discussion Papers 6743, C.E.P.R. Discussion Papers.
  3. Garduno-Rivera, Rafael, 2010. "Effect of NAFTA on Mexico's Income Distribution in the Presence of Migration," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 61895, Agricultural and Applied Economics Association.
  4. Frédéric DOCQUIER & Hillel RAPOPORT, 2011. "Globalization, brain drain and development," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2011009, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  5. Marina Murat & Sara Flisi, 2007. "Migrant Business Networks and FDI," Center for Economic Research (RECent) 002, University of Modena and Reggio E., Dept. of Economics.
  6. Garduno-Rivera, Rafael & Baylis, Katherine R., 2012. "Effect of Tariff Liberalization on Mexico’s Income Distribution in the presence of Migration," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124740, Agricultural and Applied Economics Association.
  7. Hisham Foad, 2012. "FDI and immigration: a regional analysis," The Annals of Regional Science, Springer, vol. 49(1), pages 237-259, August.
  8. Jordaan, Jacob A., 2008. "Intra- and Inter-industry Externalities from Foreign Direct Investment in the Mexican Manufacturing Sector: New Evidence from Mexican Regions," World Development, Elsevier, vol. 36(12), pages 2838-2854, December.
  9. Peter Nunnenkamp & Rudi Stracke, 2008. "Foreign Direct Investment In Post-Reform India: Likely To Work Wonders For Regional Development?," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 33(2), pages 55-84, December.
  10. Peter Nunnenkamp & José Eduardo Alatorre Bremont, 2007. "FDI in Mexico: An Empirical Assessment of Employment Effects," Kiel Working Papers 1328, Kiel Institute for the World Economy.
  11. Amaranta Melchor del Río & Susanne Thorwarth, 2006. "Tomatoes or Tomato Pickers? - Free Trade and Migration in the NAFTA Case," Working Papers 0429, University of Heidelberg, Department of Economics, revised Dec 2006.
  12. Cristina Procházková Ilinitchi, 2010. "Selected Migration Theories and their Importance on Drawing Migration Policies," Acta Oeconomica Pragensia, University of Economics, Prague, vol. 2010(6), pages 3-26.

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