School of Economics

2004 Discussion Papers

School of Economics Discussion Paper 04/04
April 2004

Foreign Direct Investment, Exports and Imports in Mexico
Penélope Pacheco-López

(Published in World Economy, 28(8): 1157-1172)

School of Economics
University of Kent at Canterbury


This paper analyses the liberalisation of foreign direct investment (FDI) in Mexico since the late-1980s, and its relationships with exports and imports. Such a process has eased the access of multinational corporations (MNCs) to the country, which has promoted exports. However, it has also resulted in a higher import content and the displacement of local firms, which has limited Mexico's economic development through the balance of payments constraint. The analysis is supported by the existence of linkages -bi-directional Granger causality- between exports, imports and FDI.

JEL Classification: F14, F21, F23, O1

Keywords: Foreign Direct Investment-Liberalisation, Imports, Exports, NAFTA, Mexico

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