"Foreign Direct Investment and Economic Growth "

Abstract

Through an empirical analysis of sectoral panel data, which allows showing specific links, spillovers between Foreign Direct Investment (FDI) and macroeconomic performance indicators for the Mexican economy are identified. The results show that: a) FDI has two particular types of concentration, one by state and other one by sectors of economic activity, b) FDI flows going to Mexico mainly seek production efficiencies, c) such flows are explained by economic growth, labor productivity and international competitiveness. With these findings, it can be said that federal economic policy must be directed to implement actions that allow located companies to absorb FDI. The sectoral panel is a little-used method that disaggregates macroeconomic relationships allowing identifying more efficient impacts.