An Examination Of Us FDI Into Mexico And Its Relation To Nafta: Understanding the Effects of Environmental Regulation and the Factor Endowments that Affect the Location Decision

Abstract

This article examines the impact of the NAFTA signing on US foreign direct investment into Mexico with respect to environmental expenditures and factors including capital, technology, and both skilled and unskilled labor. Our results demonstrate, somewhat counterintuitively, a trend of US foreign direct investment into Mexico in industries characterized as lower polluting. Further, our analysis is unable to detect firm movement to Mexico for either specifically high or low technology workers.