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

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  • Llamosas-Rosas Irving
  • Fonseca Felipe J.

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.

Suggested Citation

  • Llamosas-Rosas Irving & Fonseca Felipe J., 2018. "Determinants of FDI Attraction in the Manufacturing Sector in Mexico, 1999-2015," Working Papers 2018-07, Banco de México.
    • Handle: RePEc:bdm:wpaper:2018-07
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    More about this item

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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