This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

The Effects of Foreign Direct Investment in Mexico since NAFTA

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Waldkirch, Andreas

Additional information is available for the following registered author(s):

Abstract

Foreign Direct Investment (FDI) into Mexico has increased dramatically since the inception of the North American Free Trade Agreement (NAFTA), raising questions about its effect on the Mexican economy. This paper studies the impact of FDI on industry productivity and wages over the first ten years of NAFTA, paying particular attention to the source country and destination industry of investments. It also offers a detailed description of the evolution of FDI, its components, sectoral composition, and sources from 1994-2005. There is evidence of a positive effect of FDI on productivity, particularly total factor productivity (TFP). The effect on wages is negative or zero at best, suggesting a divergence from productivity over this time period. The positive productivity effect stems largely from U.S. FDI into non-maquiladora industries, which receive over two thirds of manufacturing FDI. There is no evidence that more distant source countries have a differential effect. Consistent with theoretical expectations, FDI into maquiladoras benefits unskilled workers at the expense of skilled workers. This effect may be strong enough to dampen income inequality.

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help file. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://mpra.ub.uni-muenchen.de/7975/
File Format:
File Function:
Download Restriction: no

Publisher Info
Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 7975.

Download reference. The following formats are available: HTML, plain text, BibTeX, RIS (EndNote), ReDIF
Length:
Date of creation: 28 Mar 2008
Date of revision:
Handle: RePEc:pra:mprapa:7975

Contact details of provider:
Postal: Schackstr. 4, D-80539 Munich, Germany
Phone: +49-(0)89-2180-2219
Fax: +49-(0)89-2180-3900
Web page: http://mpra.ub.uni-muenchen.de
More information through EDIRC

For technical questions regarding this item, or to correct its listing, contact: (Ekkehart Schlicht).

Related research
Keywords: Foreign Direct Investment Mexico NAFTA Productivity Wages Income Inequality

Other versions of this item:

Find related papers by JEL classification:
F15 - International Economics - - Trade - - - Economic Integration
F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

This paper has been announced in the following NEP Reports:

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.:
  1. Levy Yeyati, Eduardo & Panizza, Ugo & Stein, Ernesto, 2007. "The cyclical nature of North-South FDI flows," Journal of International Money and Finance, Elsevier, vol. 26(1), pages 104-130, February. [Downloadable!] (restricted)
    Other versions:
  2. Taylor, Karl & Driffield, Nigel, 2005. "Wage inequality and the role of multinationals: evidence from UK panel data," Labour Economics, Elsevier, vol. 12(2), pages 223-249, April. [Downloadable!] (restricted)
  3. Robert E. Lipsey, 2002. "Home and Host Country Effects of FDI," NBER Working Papers 9293, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  4. 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:
  5. Zadia M. Feliciano, 2001. "Workers and trade liberalization: The impact of trade reforms in Mexico on wages and employment," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 55(1), pages 95-115, October.
  6. Gordon H. Hanson, 2003. "What Has Happened to Wages in Mexico since NAFTA?," NBER Working Papers 9563, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  7. Andrew B. Bernard & Raymond Robertson & Peter K. Schott, 2004. "Is Mexico A Lumpy Country?," NBER Working Papers 10898, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  8. Andrew B. Bernard & Jonathan Eaton & J. Bradford Jensen & Samuel Kortum, 2003. "Plants and Productivity in International Trade," American Economic Review, American Economic Association, vol. 93(4), pages 1268-1290, September. [Downloadable!]
    Other versions:
  9. Blomstrom, Magnus & Kokko, Ari, 1998. " Multinational Corporations and Spillovers," Journal of Economic Surveys, Blackwell Publishing, vol. 12(3), pages 247-77, July. [Downloadable!] (restricted)
    Other versions:
  10. Aaron Tornell & Gerardo Esquivel, 1995. "The Political Economy of Mexico's Entry to NAFTA," NBER Working Papers 5322, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  11. Markusen, James R., 2002. "Multinational Firms and the Theory of International Trade," MPRA Paper 8380, University Library of Munich, Germany. [Downloadable!]
    Other versions:
  12. Andres Rodriguez-Clare & Laura Alfaro, 2004. "Multinationals and Linkages: An Empirical Investigation," 2004 Meeting Papers 145, Society for Economic Dynamics. [Downloadable!]
  13. Gordon H. Hanson & Ann Harrison, 1999. "Trade liberalization and wage inequality in Mexico," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 52(2), pages 271-288, January.
  14. Olley, G Steven & Pakes, Ariel, 1996. "The Dynamics of Productivity in the Telecommunications Equipment Industry," Econometrica, Econometric Society, vol. 64(6), pages 1263-97, November. [Downloadable!] (restricted)
  15. Yeaple, Stephen Ross, 2003. "The complex integration strategies of multinationals and cross country dependencies in the structure of foreign direct investment," Journal of International Economics, Elsevier, vol. 60(2), pages 293-314, August. [Downloadable!] (restricted)
  16. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," Review of Economic Studies, Blackwell Publishing, vol. 70(2), pages 317-341, 04. [Downloadable!] (restricted)
    Other versions:
  17. Montes-Rojas, Gabriel & Santamaria, Mauricio, 2007. "Sources of productivity growth: Evidence from the Mexican manufacturing sector," The North American Journal of Economics and Finance, Elsevier, vol. 18(3), pages 263-278, December. [Downloadable!] (restricted)
  18. Andreas Waldkirch, 2003. "The 'new regionalism' and foreign direct investment: the case of Mexico," Journal of International Trade & Economic Development, Taylor and Francis Journals, vol. 12(2), pages 151-184, June. [Downloadable!] (restricted)
  19. Jordaan, Jacob A., 2005. "Determinants of FDI-induced externalities: New empirical evidence for Mexican manufacturing industries," World Development, Elsevier, vol. 33(12), pages 2103-2118, December. [Downloadable!] (restricted)
  20. Blomstrom, Magnus, 1986. "Foreign Investment and Productive Efficiency: The Case of Mexico," Journal of Industrial Economics, Blackwell Publishing, vol. 35(1), pages 97-110, September. [Downloadable!] (restricted)
  21. Borensztein, E. & De Gregorio, J. & Lee, J-W., 1998. "How does foreign direct investment affect economic growth?1," Journal of International Economics, Elsevier, vol. 45(1), pages 115-135, June. [Downloadable!] (restricted)
    Other versions:
  22. Javorcik, Beata S. & Saggi, Kamal & Spatareanu, Mariana, 2004. "Does it matter where you come from? vertical spillovers from foreign direct investment and the nationality of investors," Policy Research Working Paper Series 3449, The World Bank. [Downloadable!]
  23. Feenstra, Robert C. & Hanson, Gordon H., 1997. "Foreign direct investment and relative wages: Evidence from Mexico's maquiladoras," Journal of International Economics, Elsevier, vol. 42(3-4), pages 371-393, May. [Downloadable!] (restricted)
    Other versions:
  24. Amil Petrin & Brian P. Poi & James Levinsohn, 2004. "Production function estimation in Stata using inputs to control for unobservables," Stata Journal, StataCorp LP, vol. 4(2), pages 113-123, June. [Downloadable!]
Full references

Statistics
Access and download statistics

Did you know? Want to help out with this project? Look for volunteer opportunities.

This page was last updated on 2008-11-18.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.