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FDI in Mexico: An empirical assessment of employment effects

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  • Nunnenkamp, Peter
  • Bremont, José Eduardo Alatorre

Abstract

We raise the question whether foreign direct investment (FDI) has contributed to employment generation in Mexico and, thereby, helped overcome the country's pressing labor market problems. The analysis draws on highly disaggregated FDI and employment data covering almost 200 manufacturing industries. We estimate dynamic labor demand functions for blue and white collar workers, including both FDI and its interaction with major industry characteristics. By employing the GMM estimator suggested by Arellano and Bond, we account for the relatively short time dimension of our panel (1994-2006). It turns out that FDI has a significantly positive, though quantitatively modest impact on manufacturing employment in Mexico. Moreover, we find no evidence supporting the widely held view that FDI adds to white collar employment in the first place. However, the positive effect on blue collar employment diminishes with increasing skill intensity of manufacturing industries.

Suggested Citation

  • Nunnenkamp, Peter & Bremont, José Eduardo Alatorre, 2007. "FDI in Mexico: An empirical assessment of employment effects," Kiel Working Papers 1328, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkwp:1328
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    References listed on IDEAS

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    Cited by:

    1. Ibarra-Olivo, J. Eduardo, 2021. "Foreign direct investment and youth educational outcomes in Mexican municipalities," Economics of Education Review, Elsevier, vol. 82(C).
    2. Téllez-León, Isela E. & Venegas-Martínez, Francisco, 2018. "Impacto de la inversión extranjera directa en el PIB mexicano por país de origen y entidad federativa de destino," Panorama Económico, Escuela Superior de Economía, Instituto Politécnico Nacional, vol. 13(26), pages 47-79, Primer se.
    3. Roberto Coronado & Eduardo Saucedo, 2019. "Drug-related violence in Mexico and its effects on employment," Empirical Economics, Springer, vol. 57(2), pages 653-681, August.
    4. Iuga Iulia, 2016. "The Management Of Foreign Direct Investment And Influence On Total Employment Rate And Labour Productivity," Polish Journal of Management Studies, Czestochowa Technical University, Department of Management, vol. 13(1), pages 81-89, June.
    5. Cesaire, Chiatchoua & Santabárbara-Sabino, Alejandro Mario, 2015. "Inversión extranjera directa y empleo en el Estado de México: ¿Qué distribución sectorial?," eseconomía, Escuela Superior de Economía, Instituto Politécnico Nacional, vol. 0(42), pages 33-50, primer se.

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    More about this item

    Keywords

    Employment; Blue and white collar workers; Manufacturing sector; Mexico; Foreign direct investment;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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