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Processed Food Trade And Foreign Direct Investment Under Nafta

Author

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  • Koo, Won W.
  • Mattson, Jeremy W.

Abstract

Trade in processed food products is rapidly growing. Trade with Canada and Mexico has especially been growing since free trade agreements have been implemented. The U.S. presence in the processed food industry in other countries through foreign direct investment (FDI) is also large and has been expanding. The relationship between trade and FDI is uncertain and subject to much debate. Japan and Canada are the largest importers of processed foods from the United States, followed by Mexico and Korea. Canada is the leading exporter of food products to the United States, followed by France, Mexico, and Italy. Canada and Mexico have, in recent years, become increasingly important trading partners in processed foods. Results from this study do not conclusively indicate any type of relationship between FDI and trade. Trade in processed foods also appears to be mostly insensitive to the exchange rate. Some of the increase in trade flows can be explained by growth in real GDP. Trade liberalization may also explain the increase in trade flows. Free trade agreements have positively influenced U.S. FDI in Canada and Mexico. Labor cost and inflation in the host country also influences U.S. FDI.

Suggested Citation

  • Koo, Won W. & Mattson, Jeremy W., 2002. "Processed Food Trade And Foreign Direct Investment Under Nafta," Agribusiness & Applied Economics Report 23566, North Dakota State University, Department of Agribusiness and Applied Economics.
    • Handle: RePEc:ags:nddaae:23566
    DOI: 10.22004/ag.econ.23566
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    File URL: https://ageconsearch.umn.edu/record/23566/files/aer470.pdf
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    Cited by:

    1. Costas Siriopoulos & Athanasios Tsagkanos & Argyro Svingou & Evangelos Daskalopoulos, 2021. "Foreign Direct Investment in GCC Countries: The Essential Influence of Governance and the Adoption of IFRS," JRFM, MDPI, vol. 14(6), pages 1-13, June.
    2. Mattson, Jeremy W. & Koo, Won W., 2002. "U.S. Processed Food Exports And Foreign Direct Investment In The Western Hemisphere," Agribusiness & Applied Economics Report 23547, North Dakota State University, Department of Agribusiness and Applied Economics.
    3. Shinichi Furuzawa & Lily Kiminami, 2017. "Changes in the international specialization of food manufacturing industry in East Asia," Asia-Pacific Journal of Regional Science, Springer, vol. 1(2), pages 359-378, October.

    More about this item

    Keywords

    International Relations/Trade;

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