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The 'new regionalism' and foreign direct investment: the case of Mexico

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  • Andreas Waldkirch

Abstract

The recent increase in foreign capital flows into developing countries has coincided with a new wave of regional trade agreements involving both developed and developing countries. This paper investigates the effect of the NorthAmerican Free TradeAgreement (NAFTA), a prime example of this new regionalism, on foreign direct investment in Mexico. Using data from the Mexican Ministry for Trade and Industrial Development (SECOFI), the major finding is that NAFTA has raised investment from the partner countries, the United States and Canada, but not from the rest of theworld. The increasing use of outsourcing and a commitment effect conveyed by the agreement are candidate explanations for a change in investors' sensitivity to the determinants of foreign direct investment.

Suggested Citation

  • Andreas Waldkirch, 2003. "The 'new regionalism' and foreign direct investment: the case of Mexico," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 12(2), pages 151-184.
    • Handle: RePEc:taf:jitecd:v:12:y:2003:i:2:p:151-184
    DOI: 10.1080/0963819032000084313
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    Citations

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    Cited by:

    1. Julia Kubny & Florian Mölders & Peter Nunnenkamp, 2011. "Regional Integration and FDI in Emerging Markets," Chapters, in: Ulrich Volz (ed.), Regional Integration, Economic Development and Global Governance, chapter 8, Edward Elgar Publishing.
    2. Eduardo Levy Yeyati & Christian Daude & Ernesto Stein, 2002. "The FTAA and the Location of FDI," Business School Working Papers diecisiete, Universidad Torcuato Di Tella.
    3. Joseph F. Francois & Gunnar Niels, 2004. "Political Influence in a New Antidumping Regime: Evidence from Mexico," Tinbergen Institute Discussion Papers 04-011/2, Tinbergen Institute.
    4. William A. Amponsah & Pablo A. Garcia-Fuentes & Joseph A. Smalley, 2020. "Remittances, market size, and foreign direct investment: a case of sub-Saharan Africa," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 44(2), pages 238-257, April.
    5. Alvaro Pereira & João Jalles & Martin Andresen, 2012. "Structural change and foreign direct investment: globalization and regional economic integration," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 11(1), pages 35-82, April.
    6. Garcia-Fuentes, Pablo A. & Kennedy, P. Lynn & Ferreira, Gustavo F.C., 2013. "U.S. Foreign Direct Investment in Latin America and the Caribbean: A case of Remittances and Market Size," 2013 Annual Meeting, February 2-5, 2013, Orlando, Florida 142985, Southern Agricultural Economics Association.
    7. M. Ayhan Kose & Guy M. Meredith & Christopher M. Towe, 2005. "How Has NAFTA Affected the Mexican Economy? Review and Evidence," Springer Books, in: Rolf J. Langhammer & Lúcio Vinhas Souza (ed.), Monetary Policy and Macroeconomic Stabilization in Latin America, pages 35-81, Springer.
    8. Eduardo Levy Yeyati & Ernesto H. Stein & Christian Daude, 2003. "El ALCA y el destino de la inversión extranjera directa," Research Department Publications 4342, Inter-American Development Bank, Research Department.
    9. Waldkirch Andreas & Tekin-Koru Ayça, 2010. "North American Integration and Canadian Foreign Direct Investment," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-40, August.
    10. William Gabriel Brafu-Insaidoo & Nicholas Biekpe, 2014. "Determinants of Foreign Capital Flows: The Experience of Selected Sub-Saharan African Countries," Journal of Applied Economics, Taylor & Francis Journals, vol. 17(1), pages 63-88, May.
    11. Ayça Tekin‐Koru & Andreas Waldkirch, 2010. "North–South Integration and the Location of Foreign Direct Investment," Review of International Economics, Wiley Blackwell, vol. 18(4), pages 696-713, September.
    12. Waldkirch, Andreas, 2006. "The ‘New Regionalism’: Integration as a Commitment Device for Developing Countries," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 21, pages 397-425.
    13. Andreas Waldkirch, 2010. "The Effects of Foreign Direct Investment in Mexico since NAFTA," The World Economy, Wiley Blackwell, vol. 33(5), pages 710-745, May.
    14. Li, Qiaomin & Scollay, Robert & Maani, Sholeh, 2016. "Effects on China and ASEAN of the ASEAN-China FTA: The FDI perspective," Journal of Asian Economics, Elsevier, vol. 44(C), pages 1-19.
    15. Aradhna Aggarwal, 2008. "Regional Economic Integration and FDI in South Asia - Prospects and Problems," Macroeconomics Working Papers 22141, East Asian Bureau of Economic Research.
    16. Andreas Waldkirch, 2011. "Comparative advantage FDI? A host country perspective," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 147(3), pages 485-505, September.
    17. repec:dau:papers:123456789/10605 is not listed on IDEAS
    18. Escobar Gamboa, Octavio Romano, 2009. "IDE entrants, exportations et productivité manufacturière : les différentes performances des régions mexicaines," Economics Thesis from University Paris Dauphine, Paris Dauphine University, number 123456789/3850 edited by Guillochon, Bernard.
    19. MacDermott, Raymond, 2007. "Regional trade agreement and foreign direct investment," The North American Journal of Economics and Finance, Elsevier, vol. 18(1), pages 107-116, February.
    20. Tekin-Koru, Ayca & Waldkirch, Andreas, 2007. "North American Integration and the Location of Foreign Direct Investment," MPRA Paper 5212, University Library of Munich, Germany.
    21. Joanna Dzialo & Bogna Gawronska-Nowak & Ziemowit Stanczyk, 2017. "What do we really know about the Transatlantic Trade and Investment Partnership: Facts versus myths? Trying to understand social expectations," International Journal of Business and Economic Sciences Applied Research (IJBESAR), International Hellenic University (IHU), Kavala Campus, Greece (formerly Eastern Macedonia and Thrace Institute of Technology - EMaTTech), vol. 11(1), pages 52-60, December.
    22. Davies, Ronald B., 2005. "Fragmentation of headquarter services and FDI," The North American Journal of Economics and Finance, Elsevier, vol. 16(1), pages 61-79, March.
    23. Andreas Waldkirch, 2004. "Vertical FDI? A Host Country Perspective," International Trade 0403008, University Library of Munich, Germany.

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