Foreign Direct Investment in Mexico during the 1990s: An Empirical Assessment

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Foreign Direct Investment in Mexico during the 1990s: An Empirical Assessment

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Miguel D. Ramirez () (Department of Economics, Trinity College)

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Miguel D. Ramirez

Abstract

This paper examines the major economic and institutional factors underlying the surge in foreign direct investment (FDI) flows to Mexico during the 1990s. It presents evidence that indicates that market-friendly economic reforms and major changes in the institutional-legal status of foreign capital are, in large measure, responsible for the rapid increase in FDI inflows to leading sectors of the Mexican economy. The econometric results presented in the paper suggest that market size, the real exchange rate, and institutional reforms such as the elimination of restrictions on profit and dividend remittances and the implementation of a selective debt conversion program are economically significant in explaining the variation in FDI inflows to the country. Finally the paper addresses the long-term negative effects that rapidly growing profit and dividend remittances may have on the financing of capital formation and the Mexican balance of payments.

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Article provided by Palgrave Macmillan Journals in its journal Eastern Economic Journal.

Volume (Year): 28 (2002)
Issue (Month): 3 (Summer)
Pages: 409-423
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Handle: RePEc:pal:easeco:v:28:y:2002:i:3:p:409-423

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Article
- Miguel D. Ramirez, 2002. "Foreign Direct Investment in Mexico during the 1990s: An Empirical Assessment," Eastern Economic Journal, Eastern Economic Association, vol. 28(3), pages 409-423, Summer. [Downloadable!]

Find related papers by JEL classification:
F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
O19 - Economic Development, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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.:

Magnus Blomstrom & Edward N. Wolff, 1994. "Multinational Corporations and Productivity Convergence in Mexico," NBER Working Papers 3141, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
Other versions:
- Blomstrom, Magnus & Wolff, E.N., 1989. "Multinational Corporations And Productivity Convergence In Mexico," Working Papers 89-28, C.V. Starr Center for Applied Economics, New York University. [Downloadable!]
Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
Figueroa, Adolfo, 1998. "Equity, Foreign Investment and International Competitiveness in Latin America," The Quarterly Review of Economics and Finance, Elsevier, vol. 38(3), pages 391-408. [Downloadable!] (restricted)
Zhang, Kevin Honglin, 2001. "What Attracts Foreign Multinational Corporations to China?," Contemporary Economic Policy, Oxford University Press, vol. 19(3), pages 336-46, July.

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