United States Manufacturing Direct Investment and Trade: The Case of Canada and Mexico under NAFTA and Earlier Trade Liberalization Measures
Journal Title: Review of Economics & Finance - Year 2017, Vol 7, Issue 1
Abstract
This paper examines the apparent impact of the formation of the North American Free Trade Agreement (NAFTA) and earlier relevant trade liberalization measures on U.S. manufacturing direct investment and trade vis-à-vis Canada and Mexico. Employing a maximum likelihood regression approach that focuses on the relationship between U.S. manufacturing direct investment in Canada and Mexico and its manufacturing trade with each of these countries, as well as the real GDP of each country, serving as a “gravity model” proxy variable, empirical results are presented for the period 1989-2013. The results suggest that the process of regional economic integration in North America, with its concomitant relaxation of trade barriers, has served to modify what one would otherwise expect on the basis of the conceptual frameworks and scenarios that have thus far been developed in the literature with regard to the relationship of foreign direct investment to international trade. With regard to the expected relevance of gravity-type influences on U.S. direct manufacturing investment in its two NAFTA partners, for Canada these influences appear to be confirmed, but not so for Mexico, owing to the close interconnection between U.S. manufacturing direct investment in Mexico and its Mexican manufacturing trade.
Authors and Affiliations
Andrew R. Blair
Keywords
Related Articles
- EP ID EP258250
- DOI -
- Views 98
- Downloads 0
A “litmus test” of Deficit Sustainability: The Case of the Greek Budget Deficit
The paper applies three sustainability tests to the Greek budget deficit, which is known to be unsustainable, and can therefore be used to check the reliability of the three tests. Using three deficit definitions, i.e.,...
An Empirical Analysis of UK House Price Risk Variation by Property Type
This paper examines the different risk and return profiles of four different property types in England and Wales, both nationally and by region. The property types include flats, terraced houses, semi-detached and detach...
United States Manufacturing Direct Investment and Trade: The Case of Canada and Mexico under NAFTA and Earlier Trade Liberalization Measures
This paper examines the apparent impact of the formation of the North American Free Trade Agreement (NAFTA) and earlier relevant trade liberalization measures on U.S. manufacturing direct investment and trade vis-à-vis C...
Correlations and Volatility Spillovers between the Carbon Trading Price and Bunker Index for the Maritime Industry
This research intends to investigate the relationship between carbon trading price and the bunker fuel index, with inputs from reviewing current greenhouse gas (GHG) mitigation management and financial measures, for the...
What Determines Union Density? A Political Economy Model of the Labor Market with Empirical Evidence in the Context of European Countries
In this investigation, a political economy model of the labor market is proposed, where unions offer their (old and new) affiliates the combinations between the average real wage level and the standard deviation of wages...