The trade balance effects of U.S. foreign direct investment in Mexico.

From: Atlantic Economic Journal | Date: March 1, 1999| Author: Tinkler, Sarah; Wilamoski, Peter | Copyright information

US foreign direct investments (FDI) in Mexico increase exports to and imports from Mexico. OLS estimates show a small positive effect on the trade balance due to greater FDI. Impulse response functions reveal that the positive effect of exports is complete within two years but the effect of imports felt only after two years. This findings suggest that FDI is responsible for the rapid rise in trade between the two countries. The small positive effect on US trade balance with Mexico will lessen...

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