Foreign Direct Investment In Mexico Research Articles

The impact of political parties on foreign direct investment within Mexico

Today we can identify a variety of political and economic systems in the world. A free market economic system is more likely to work if it is based on a democratic political system. According to the Democracy Index 2021, Mexico went from being an imperfect democracy to a hybrid regime, with the risk of becoming an authoritarian regime. The transition from a political system of imperfect democracy to a hybrid regime represents a great risk for domestic and foreign private investment. There is a latent political risk for investors in this type of countries, which scares away foreign direct investment. This research presents an analysis of the behavior of foreign direct investment in Mexico from 2000 to 2021 by state and political party. The results from a point biserial correlation test prove the existence of a dependence between the attraction of foreign investment and the political party in government. Mexico attracted lower capital inflows since the presence of MORENA, actual political party that is in both, the federal and some state governments. Descriptive statistics show that in most of the matches there is a dependence and also a correlation, however it is prudent to study the direction of this relationship and the strength. The findings are based on an analysis of three years of government of the MORENA political party; therefore, a longer period could be considered for future research.

Construction of Mexico's geopolitical policy for strengthening the implementation of foreign direct investment in Mexico

Mexico has a long history of bilateral policies that impact each other. Geographically, it is in a strategic location bordering the USA. In addition, the establishment of various international cooperation frameworks has increased the flow of foreign capital into Mexico. This study aims to 1) examine the international framework of FDI policy in Mexico and 2) determine the effect of FDI on increasing economic growth in Mexico. The methodology used is a combination method that combines qualitative analysis to construct an analytical framework and quantitative analysis by looking directly at statistical data related to increased capital flows, economic growth, and other indicators. This research provides results showing that the increase in foreign capital inflows in Mexico is part of the response to the global situation of the prepared policy scenario. The results of this study provide a framework of international strategies and policies undertaken by Mexico in preparing a response to foreign direct investment (FDI) entering the country.

The Challenge of Foreign Investment in Mexico: Between Theory and Public Opinion. An Analysis of Perception and Challenges Regarding Fdi As A Source of Innovation

Purpose: This research explores the public opinion of online news consumers, expressed through Facebook comments, regarding Foreign Direct Investment (FDI) as a source of innovation in Mexico. The study seeks to comprehend the challenges faced by FDI in the country and their potential impact on the public perception of FDI as a driver of innovation in the Mexican economy. Theoretical Framework: This study examines previous research that explores FDI as a source of innovation in host economies, aiming to provide the context necessary for understanding how the public perceives the role of foreign resources in fostering innovation in Mexico. Design/Methodology/Approach: The methodology employed in this research was the phenomenological design of a qualitative approach to analyze interactions and comments on Facebook from users who consume online news related to FDI in Mexico. The aim was to identify patterns and trends in public opinion regarding the perception of FDI as a source of innovation. Findings: The theoretical perspective suggests that FDI can foster innovation in host countries; however, an analysis of public perception revealed challenges and controversies associated with FDI in the Mexican economy. Research, Practical & Social Implications: The comprehension of public opinion regarding FDI as a source of innovation allows the establishment of suitable strategies for the integration of Mexican companies into the international market. Originality/Value: This paper offers a perspective to understand how public opinion of FDI can influence its role as a catalyst for innovation in the Mexican economy.

The challenge of Foreign Investment in Mexico: Between Theory and Public Opinion. An Analysis of Perception and Challenges Regarding FDI as a Source of Innovation

Purpose: This research explores the public opinion of online news consumers, expressed through Facebook comments, regarding Foreign Direct Investment (FDI) as a source of innovation in Mexico. The study seeks to comprehend the challenges faced by FDI in the country and their potential impact on the public perception of FDI as a driver of innovation in the Mexican economy. Theoretical Framework: This study examines previous research that explores FDI as a source of innovation in host economies, aiming to provide the context necessary for understanding how the public perceives the role of foreign resources in fostering innovation in Mexico. Design/Methodology/Approach: The methodology employed in this research was the phenomenological design of a qualitative approach to analyze interactions and comments on Facebook from users who consume online news related to FDI in Mexico. The aim was to identify patterns and trends in public opinion regarding the perception of FDI as a source of innovation. Findings: The theoretical perspective suggests that FDI can foster innovation in host countries; however, an analysis of public perception revealed challenges and controversies associated with FDI in the Mexican economy. Research, Practical & Social Implications: The comprehension of public opinion regarding FDI as a source of innovation allows the establishment of suitable strategies for the integration of Mexican companies into the international market. Originality/Value: This paper offers a perspective to understand how public opinion of FDI can influence its role as a catalyst for innovation in the Mexican economy.

Insecurity and political uncertainty: Factors that Influence the Fall of Foreign Direct Investment in Mexico

One of the fundamental aspects of any government is to have a national development plan that establishes the guidelines that will guide the destiny of the nation. In the case of Mexico, each six-year presidential term has a national development plan that may or may not have continuity, where one of its main objectives is economic growth. The attraction of foreign direct investment is one of the pillars of economic growth, however, it can be affected by various national and international factors. This research analyzes the behavior of foreign direct investment during four presidential terms in Mexico from 1999 to date. The first twelve years were governed by the national action party (PAN, right wing political party), from 2012 to 2018 by the institutional revolutionary party (PRI, center-right political party) and from 2019 to date by the MORENA political party (left wing political party). The methodology applied for this research was an autoregressive process of order one. We highlight that the arrival to the presidency by the PAN in the year 2000 brought large flows of foreign capital during it´s six-year term, however, during the period from 2006 to 2012 also governed by the PAN there is a decrease in the attraction of FDI of 27% in relation to the previous period. Likewise, a 16% drop in FDI is also observed during the period from 2012 to 2018 governed by the PRI and a drop of almost 5% from 2019 to date, a period governed by the political party MORENA. As a conclusion, we can argue that the drop in FDI in the period studied can be attributed to various factors such as organized crime as well as the distrust of investors derived from the arrival of a leftist political party to the government.

State-level Location Determinants of Japanese Automotive FDI in Mexico

Foreign Direct Investment (FDI) location theories highlight the regional factors that influence the location and spatial distribution of the investment project. The study employs a state-level spatial panel econometric model to empirically contrast the main location factors that influence the spatial distribution of Japanese companies. The main results indicate that state characteristics related to the presence of infrastructure, lower wages, agglomeration, and development of the automotive industry influence the presence of Japanese automotive firms in Mexico. The results also highlight the presence of negative spatial externalities for the wages, population, industry agglomeration, and education variables. This shows that neighboring states compete for the arrival of Japanese automotive firms and spatial effects are present. Positive spatial externalities were observed from the market size variable, which can reflect the presence of production networks in the automotive industry, especially for the case of Japanese firms.

Hybrid Political Regime: The Fall of Foreign Direct Investment in Mexico

Today we can identify a variety of political and economic systems in the world. A free market economic system is more likely to work if it is based on a democratic political system. According to the Democracy Index 2021, Mexico went from being an imperfect democracy to a hybrid regime, with the risk of becoming an authoritarian regime. The transition from a political system of imperfect democracy to a hybrid regime represents a great risk for domestic and foreign private investment. There is a latent political risk for investors in this type of country, which scares away foreign direct investment. This research presents an analysis of the behavior of foreign direct investment in Mexico from 2000 to 2021 by state and political party. A point biserial correlation test is performed to prove the existence of a dependencie between the attraction of foreign investment and the political party in government. Lower capital inflows in Mexico is observed since the presence of MORENA, actual political party that is in both, the federal and some state governments. Descriptive statistics show that in most of the matches there is a dependence and also a correlation, however it is prudent to study the direction of this relationship and the strength. The findings are based on an analysis of three years of government of the MORENA political party; therefore, a longer period could be considered for future research.

FDI and the growing wage gap in Mexican municipalities

AbstractInward foreign direct investment (FDI) has generally been linked to higher wages, but evidence remains sparse on the overall effects of FDI on average wages, the wage gap between skilled and unskilled labour, and inter‐industry heterogeneity. We address these issues for Mexican municipalities and industries for a period of increasing FDI and sectoral change that saw growing wage inequality. By combining two non‐experimental techniques we find that FDI in Mexico was associated with higher wages, mostly for skilled workers—but also for unskilled ones—and a widening gap between them. Effects vary both between and within industries depending on location, and they either wax or wane when the initial or incremental effects are considered.

China's foreign direct investment in Mexico's auto parts-automotive industry:

In 2020 China displaced the United States as the main country of origin of cross-border M&A type investments and ranked fourth as the origin of new greenfield projects. In the regional context, since 2010 Mexico appears as the second destination of Chinese direct investment directed to manufacturing and as the first destination in the automotive auto parts industry (AAI). The article examines the determinants of Chinese direct investment in Mexico from a regional perspective and from the case study of the Chinese multinational Minth based on Aguascalientes, Mexico. The results allow us to conclude that the growing presence of direct investment by Chinese private companies in the AAI is explained by the favorable prospects for demand generated by the presence of global assemblers in Mexico and geographic and institutional variables such as the proximity whit United States, the agglomeration economies presence and benefits of the United States-Mexico-Canada Agreement (USMCA).

The Effect of Mexican Emigration to the US on Trade and Inward FDI in Mexico*

Using a panel data set of the 32 Mexican states and the 10 years from 2008 and 2017, this paper estimates the potential contribution of migration to international trade and foreign direct investment (FDI). In the context of Mexico and the United States, we estimate models with a generalized propensity scores (GPS) methodology in order to account for the endogeneity of the migration decision, in addition to baseline gravity models. We find a generally positive and significant relationship between Mexico-US migration and Mexico-US imports, exports, and inward FDI from the US to Mexico. While mixed evidence is found across the various gravity estimations regarding the relationship between Mexico-US migration and inward FDI from the US to Mexico, the GPS results signal consistency across various estimations. Even when controlling for size of the state population, size of the state economy, distance from the capital city of each state to the Mexico-US border, and the fact that a state is on the Mexico-US border, basic results remain consistent. We conclude that in this context migration complements trade and inward FDI, and point to transnationalism as a central factor that leads to migration’s positive contribution.

Capacity to attract foreign direct investment in mexico in the manufacturing sector and its impact on the automotive industry

En el presente artículo se identifica el comportamiento de la Inversión Extranjera Directa (IED) en México respecto al sector manufacturero y sus determinantes en la “Industria Automotriz”, determinando su impacto a través de un análisis aplicado en la regresión lineal. Asimismo se detectan las principales variantes de crecimiento económico en el país, que permiten contribuir a la inversión, logrando alcanzar un alto nivel de producción, incorporación de nuevas empresas, oferta laboral, así como la oportunidad y los beneficios retroactivos de dicho sector. Constituye un medio para establecer vínculos directos y de larga duración entre las economías, para el desarrollo de otras empresas locales, así como para mejorar la competitividad de la economía receptora como la inversora. La IED también ofrece a la economía receptora una oportunidad para promocionar de forma más extensa sus productos en los mercados internacionales. Además de tener un impacto positivo en el desarrollo del comercio internacional, la IED es una fuente importante de capital para las numerosas economías receptoras e inversoras.

Análisis de los principales determinantes de la aglomeración industrial: el caso de la IED japonesa automotriz en México

The current research analyses the agglomeration behavior of Japanese Foreign Direct Investment in Mexico’s automotive sector in the Bajio region. The study employs unpublished data obtained from Mexico’s Secretariat of Economy. The database is used to carry out the empirical analysis using spatial econometric techniques and test the presence of spatial dependence in the variables of the model. According to the results, Gross Domestic Product (GDP) per capita, labor force, transportation infrastructure, and geographical distance explain Japanese FDI agglomeration in Mexico’s Bajio region. The results also elucidate that economic similarities within entities may help attract investment in similar proportions to neighboring states. Additionally, positive spatial effects from Japanese FDI were found, suggesting that an increase in Japanese FDI in one state is followed by increments of Japanese investment in neighboring states. This may be evidence of horizontal cooperation and a result of Japanese firms taking advantage of scale economies and the development of specialized labor markets and suppliers in the Bajio region.

Análisis de los Efectos Productivos de la Inversión Extranjera Directa de Japón sobre la Industria Electrónica de México

Introducción: La Inversión Extranjera Directa (IED) se considera una fuente para aumentar la productividad de industrias manufactureras en países en desarrollo. México, desde su proceso de apertura comercial ha facilitado la llegada de empresas extranjeras esperando beneficios económicos en forma de derrames. El caso de análisis de la IED de Japón en México resalta ya que, desde la entrada en vigor del Acuerdo de Asociación Económica en 2005 entre estos dos países, los flujos de IED se han incrementado de manera considerable sobre todo con presencia en la industria electrónica. Estudios previos han demostrado que debido a las características intrínsecas de la IED japonesa, se encuentran impactos positivos y relevantes para la productividad de diferentes industrias manufactureras en diferentes contextos. El objetivo de este estudio es el análisis de los efectos productivos de la Inversión Extranjera Directa (IED) de Japón sobre el crecimiento en producción de la industria electrónica de México durante el periodo de 2000 al 2016.Método: Se utilizó la metodología KLEMS como base para el modelo econométrico. Se presentan dos modelos de regresión de series de tiempo donde, a nivel agregado, se relacionan factores de producción (capital nacional, capital extranjero o IED, mano de obra, energía, materiales y servicios) como variables independientes para observar sus efectos en la variable dependiente: producción de la industria electrónica. La hipótesis general de trabajo es: la IED de Japón tiene un efecto positivo y representativo en la producción de cada una de las ramas de la industria electrónica de México. Ambos modelos son estimados en términos logarítmicos desde 2000 al 2016, el primero analizando la industria en su totalidad y el segundo dividido por ramas específicas de la industria. A su vez, los resultados se contrastan con un tercer modelo que sigue una función de producción tipo Cobb-Douglas, con dos factores (capital y trabajo) para comparar y corroborar los resultados encontrados.Resultados: Los resultados señalan efectos positivos y significativos para tres de las seis ramas analizadas de la industria electrónica.Discusión o Conclusión: De los resultados obtenidos se concluye que la IED Japonesa tiene efectos productivos positivos en las ramas electrónicas de computadores y equipo periférico y en la de audio y video. Bajo ciertas especificaciones se encuentran efectos adicionales en la rama de equipos magnéticos y ópticos. El análisis sugiere que los efectos de la IED deben ser analizados por rama y/o clase económica industrial dentro del país receptor. Así mismo, bajo la metodología KLEMS, se encuentra una fuerte relación entre los consumos intermedios de los factores de producción, principalmente materiales, con el crecimiento de la producción de esta industria.

Latin American Nations at a Crossroads: Status‐quo or Policy Change?

This first issue of Latin American Policy for 2020 takes the pulse of major events in the region. Readers will find six well-written research articles dealing with policy challenges in key Latin American countries. Élodie Brun and Kevin Parthenay offer a sociological study on how states and institutional actors within the United Nations deal with the Venezuelan crisis and Nicaraguan issues under their respective agendas, highlighting the “multiple voices” that coexist in the multilateral organization. Felipe Brasil, Ana Claudia Niedhardt Capella, and EJ Fagan elaborate an innovative approach to explain public policy in Brazil by applying the punctuated equilibrium theory to agenda setting in the country. Victoria Finn and Sebastián Umpierrez de Reguero’s contribution highlights the language, timing, and implementation of Chile’s current migratory policies, considering whether they seek simply to satisfy international standards, with no true inclusivity. Our first section also includes two studies on Colombia. Catalina Montoya Londoño explores the divergent media diplomacy messages that the United States and the European Union use when reporting on the fragile peace process in the country, while Milan Skolnik studies the repercussions of corruption on political participation. Finally, this section includes research by John P. Tuman and Hafthor Erlingsson explaining the rationale behind Chinese foreign direct investment in Mexico in recent years. Since Latin America is currently a hot spot for many diverse phenomena and challenges, we have invited respected specialists to cover significant issues on the front burner today. Our Policy and Perspectives sections include different essays assessing current key aspects of human rights in Bolivia, the triumph of the Peronists in the last Argentine presidential election, social upheaval in Chile, the political impasse in Venezuela, and Mexico’s relationship with the United States after the first year of the López Obrador administration. The aim of all these documents and essays is to inform our readers and give them the necessary tools to decodify the specific situations taking place in these countries, which find themselves trapped between tried and true policy options that stick to the status quo, or new ones that could prompt changes. Isidro Morales is a researcher and professor in the School of Government and Public Transformation at the Tecnológico de Monterrey, and an external fellow of the Mexico–United States Center at Rice University’s Baker Institute.

Foreign direct investment flows to Mexican states: A study of the automobile industry, 2004–2014

AbstractThis study examines the subnational flow in foreign direct investment (FDI) to Mexican states, with a focus on the finished vehicle industry. Although prior studies have examined subnational FDI in Mexico, research on the automobile sector has been scant. Utilizing a framework associated with the theory of asset specificity, we examine the influence of human capital and labor conditions, infrastructure, subnational policies, and security. The study employs a data set on finished vehicle FDI across 31 states and the Federal district for the period of 2004–2014. We adopt a two‐part model. The first part, which includes all states and the Federal district, is estimated with pooled logistic and Firth logistic regressions. In the second part, we examine variation in levels of FDI among states selected for investment with pooled ordinary least squares with panel‐corrected and Driscoll Kraay standard errors. Labor conditions are significant for both state selection and levels of FDI, but education is influential only in the selection stage. In addition, states with trunk rail lines linked to the U.S. border are more likely to be selected and receive higher FDI. After controlling for these influences, murder and homicide rates, and state development have no significant effects.

Spatial linkages and third-region effects: evidence from manufacturing FDI in Mexico

We analyze the main characteristics that help explain the regional distribution of manufacturing foreign direct investment (FDI) in Mexico. Our main findings indicate the presence of a positive spatial relationship among states’ FDI which, combined with the zero effect found for the market potential variable, points to the presence of complex vertical FDI. We consider that this is consistent with the fact that just over a third of manufacturing FDI in the country is located in the automotive sector. Moreover, we find positive direct and indirect effects of human capital, agglomeration, and states’ fiscal margins. Based on the results of this research, attraction of FDI should be considered in a regional context and not only from a local perspective.

Foreign direct investment in Mexico 2015-2017

Foreign direct investment in Mexico 2015-2017

Sourcing patterns of export‐platform foreign affiliates: The case of Japanese affiliates in Mexico

AbstractThis study investigates the sourcing patterns of Japanese export‐platform foreign affiliates in Mexico, which mainly export to the United States and Canada. We propose a novel approach to estimate intermediate input elasticities of exports by sourcing country. We find that, on average, Japanese export‐platform foreign affiliates in Mexico source intermediate inputs from third countries, including the United States and Canada, rather than from Japan and Mexico, suggesting that Japanese export‐platform foreign affiliates in Mexico are mainly integrated into the vertical production networks back and forth between Mexico, the United States and Canada. In turn, Japanese foreign affiliates selling domestically in Mexico source intermediate inputs not only within the North American Free Trade Agreement countries but also from Japan. In addition, we find that export‐platform foreign affiliates in Mexico use more labour‐intensive production than do foreign affiliates selling domestically in Mexico. This suggests that saving labour costs is one of the motives for export‐platform foreign direct investment in Mexico.

FOREIGN DIRECT INVESTMENT AND ITS DETERMINANTS IN MEXICO FROM 1992 TO 2003. A SPECIAL APPROACH IN THE EXCHANGE RATES

En años recientes (de 1990 a la fecha) ha habido un incremento considerable en los flujos de Inversión Extranjera Directa (IED) y de empresas multinacionales en todas las economías del mundo. En este artículo, hacemos un análisis econométrico de los principales determinantes de la Inversión Extranjera Directa de once países en el período 1992-2003 en México, haciendo énfasis en los tipos de cambio. Para ello utilizaremos un panel de datos y se demostrará empíricamente que el salario del país receptor de IED, el PIB del país receptor de IED, el PIB del país que hace IED, el grado de apertura del país receptor de IED, el tipo de cambio del país receptor de IED y su volatilidad son variables determinantes que explican el comportamiento de la IED en México.

Foreign Direct Investment in Mexico: Acquisition of Banamex by Citigroup

Foreign Direct Investment in Mexico: Acquisition of Banamex by Citigroup