Economics at your fingertips  

United States Manufacturing Direct Investment and Trade: The Case of Canada and Mexico under NAFTA and Earlier Trade Liberalization Measures

Andrew R. Blair ()
Additional contact information
Andrew R. Blair: Katz Graduate School of Business and College of Business Administration, University of Pittsburgh 342 Mervis Hall, Pittsburgh, PA 15260, U.S.A.

Review of Economics & Finance, 2017, vol. 7, 50-65

Abstract: This paper examines the apparent impact of the formation of the North American Free Trade Agreement (NAFTA) and earlier relevant trade liberalization measures on U.S. manufacturing direct investment and trade vis-¨¤-vis Canada and Mexico. Employing a maximum likelihood regression approach that focuses on the relationship between U.S. manufacturing direct investment in Canada and Mexico and its manufacturing trade with each of these countries, as well as the real GDP of each country, serving as a ¡°gravity model¡± proxy variable, empirical results are presented for the period 1989-2013. The results suggest that the process of regional economic integration in North America, with its concomitant relaxation of trade barriers, has served to modify what one would otherwise expect on the basis of the conceptual frameworks and scenarios that have thus far been developed in the literature with regard to the relationship of foreign direct investment to international trade. With regard to the expected relevance of gravity-type influences on U.S. direct manufacturing investment in its two NAFTA partners, for Canada these influences appear to be confirmed, but not so for Mexico, owing to the close interconnection between U.S. manufacturing direct investment in Mexico and its Mexican manufacturing trade.

Keywords: Empirical studies of trade; Economic integration; International investment; Long term capital movements; Industry studies: manufacturing, general (search for similar items in EconPapers)
JEL-codes: F14 F15 F21 L60 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed

Downloads: (external link) (application/pdf)

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:

Ordering information: This journal article can be ordered from
17 Alton Towers Circle, Unit 101 Toronto, ON, M1V3L8, Canada

Access Statistics for this article

Review of Economics & Finance is currently edited by H. Carlson

More articles in Review of Economics & Finance from Better Advances Press, Canada 17 Alton Towers Circle, Unit 101 Toronto, ON, M1V3L8, Canada.
Series data maintained by Carlson ().

Page updated 2017-09-29
Handle: RePEc:bap:journl:170104