Foreign Direct Investment in Mexico since the Approval of
AbstractCross-country panel data are used to assess the effect of free-trade agreements on flows of foreign direct investment ( fdi ). Free-trade agreements are found to have a significant positive effect on fdi flows, and free-trade agreements are found to matter more for the smaller members of the agreement. For example, the North American Free-Trade Agreement's ( nafta ) effect on fdi flows into Mexico is much larger than its effect on flows into the United States. These cross-country results are used to assess nafta 's effect on fdi flows into Mexico. After controlling for a set of other factors--such as an increase in worldwide fdi flows--the trade agreement is found to generate fdi flows nearly 60 percent higher than they would have been without the agreement. Copyright 2005, Oxford University Press.
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Bibliographic InfoArticle provided by World Bank Group in its journal The World Bank Economic Review.
Volume (Year): 19 (2005)
Issue (Month): 3 ()
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CEPR Discussion Papers
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