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Contribution of foreign direct investment to Mexico's economic growth during the neoliberal period

Author

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  • José Romero

    (El Colegio de México)

Abstract

This paper analyses the impact of foreign direct investment on labor productivity for the period in which neoliberal policies were applied (1983-2018). It proposes a production function with labor and three types of capital: private national, foreign and government. From the production function in levels we derived a relationship concerning growth rates, and since the variables in levels are I(1) and co-integrated, a VEC model was used. Our estimate finds a long run joint positive causality for the three types of capital on labor productivity, but in the short run, the growth of foreign capital does not cause an increase in labor productivity. This is a critical issue, since Mexican economic policy, throughout its entire political regime, has been based on the assumption that foreign direct investment (FDI) is the primary source of growth of the Mexican economy.

Suggested Citation

  • José Romero, 2019. "Contribution of foreign direct investment to Mexico's economic growth during the neoliberal period," Serie documentos de trabajo del Centro de Estudios Económicos 2019-01, El Colegio de México, Centro de Estudios Económicos.
    • Handle: RePEc:emx:ceedoc:2019-01
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    File URL: https://cee.colmex.mx/dts/2019/DT-2019-1.pdf
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    More about this item

    Keywords

    Mexican economy; economic growth; foreign direct investment; FDI;
    All these keywords.

    JEL classification:

    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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