NAFTA and Flow of FDI into Mexico: Investment Diversion or Stock Adjustment?*

Hyeryeon Jung and Yoon Heo

International Area Studies Review, 2005, vol. 8, issue 2, 71-91

Abstract: While the investment creationeffect of regional integration agreements has attracted increased attention in recent years, few studies have examined the impact on investment flows to nonmember countries. This paper investigates ***whether evidence exists for diversion of FDI from Latin America to Mexico both before and after NAFTA to examinethe*** impact of regional integration agreements (RIAs) on FDI inflow by conducting simulations based on a gravity model. A cursory observation of recent FDI trends might give rise to such claims of diversion. Over the post-NAFTA period as a whole, this paper finds that Mexico's FDI performance was not significantly different from the Latin American norm. The findings lead us to conclude that there is no evidence of FDI diversion between these two regions. The fact that stock adjustment is completed in Mexico may be one of the reasons that Mexico has not shown expected FDI inflow ratios.

Keywords: NAFTA; Mexico; Investment Diversion; Stock Adjustment; FDI (search for similar items in EconPapers)
Date: 2005
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/223386590500800204 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:intare:v:8:y:2005:i:2:p:71-91

DOI: 10.1177/223386590500800204

Access Statistics for this article

More articles in International Area Studies Review from Center for International Area Studies, Hankuk University of Foreign Studies
Bibliographic data for series maintained by SAGE Publications ().