Analysing the determinants of US direct investment in Mexico

Authors
Love, JH Lage-Hidalgo, F
Citation
Jh. Love et F. Lage-hidalgo, Analysing the determinants of US direct investment in Mexico, APPL ECON, 32(10), 2000, pp. 1259-1267
Citations number
41
Categorie Soggetti
Economics
Journal title
APPLIED ECONOMICS
ISSN journal
00036846 → ACNP
Volume
32
Issue
10
Year of publication
2000
Pages
1259 - 1267
Database
ISI
SICI code
0003-6846(20000815)32:10<1259:ATDOUD>2.0.ZU;2-9
Abstract
In this paper a simple model of foreign direct investment is developed and tested on investment flows from the USA to Mexico between 1967 and 1994 usi ng cointegration analysis. Domestic demand and relative factor costs are fo und to influence direct investment flows, suggesting support for both the ' cheap labour' and 'market size' hypotheses. The short-run dynamics of the m odel indicate that exchange rate movements have an effect on the timing of the investment decision.