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Determinants of FDI Attraction in the Manufacturing Sector in Mexico, 1999-2015

Fonseca Felipe J. and Irving Llamosas-Rosas ()

No 2018-07, Working Papers from Banco de México

Abstract: Using an up-to-date database that improves the identification of the destination of the Foreign Direct Investment (FDI) among Mexican states and spatial panel econometric models that quantify the potential interactions and spillover effects, we analyze the main characteristics that help understand the regional distribution of manufacturing FDI in Mexico. Our main findings indicate the presence of a positive spatial relationship among states' FDI; for example, a higher investment creates a positive spillover effect on neighboring states' FDI and positive direct and indirect effects of human capital, agglomeration and states' fiscal margin. Based on the results of this research, key implications for public policy oriented to strengthen the FDI reside in increasing the average education level and improving tax revenue of Mexican states.

Keywords: FDI; spatial panel econometric models; spillover effects (search for similar items in EconPapers)
JEL-codes: C21 C23 R12 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cse, nep-geo, nep-int and nep-sbm
Date: 2018-06
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