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The effect of trade liberalisation and foreign direct investment in Mexico

Vasquez Galan, Belem Iliana (2006)
Ph.D. thesis, University of Birmingham.

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Abstract

This thesis analyses how trade liberalisation and Foreign Direct Investment (FDI) have impacted on Mexico’s economy. Time series econometric estimations techniques and estimations of a dynamic simultaneous equations system were conducted using quarterly data (from 1980 to 2002). In a VAR framework, calculations showed that only exports do Granger cause GDP. Under NAFTA, it emerged that exports and GDP do Granger cause FDI. Variance decomposition and impulse response functions confirmed the relative importance of each variable in the system. 3SLS estimations including instruments of fiscal and monetary policies and inflation, demonstrated that the main determinants of GDP are capital accumulation, labour productivity and FDI. Other findings confirm that exports, differences in relative wages and currency depreciation are explicative of FDI. Exports are highly dependent on the world economy and exchange rate fluctuations. Labour productivity and FDI improve human capital. Similarly, GDP and human capital induce productivity gains and capital accumulation improves due to technology transfer, infrastructure, personal income and peso appreciation. Dynamic effects of government policies and exogenous variables were analysed via multiplier analysis. The real exchange rate and world economy exert the strongest acceleration on exports and FDI growth. Multiplier effects of the monetary base showed than an expansionary monetary policy has the capacity to decelerate the interest rate and thereby to enhance FDI and its spillovers.

Type of Work:Ph.D. thesis.
Supervisor(s):Ford, James
School/Faculty:Schools (1998 to 2008) > School of Social Science
Department:Department of Economics
Subjects:HG Finance
HB Economic Theory
Institution:University of Birmingham
Library Catalogue:Check for printed version of this thesis
ID Code:89
This unpublished thesis/dissertation is copyright of the author and/or third parties. The intellectual property rights of the author or third parties in respect of this work are as defined by The Copyright Designs and Patents Act 1988 or as modified by any successor legislation. Any use made of information contained in this thesis/dissertation must be in accordance with that legislation and must be properly acknowledged. Further distribution or reproduction in any format is prohibited without the permission of the copyright holder.
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