By critically appraising current theories of both Foreign Direct Investment (FDI) and agglomeration, this book explores the variety of links that exist between these two externality-creating phenomena. Using in-depth empirical research on Mexico, Jacob Jordaan constructs and analyzes several datasets on Mexican manufacturing industries at various geographical scales, creating innovative models on FDI externalities that incorporate explicitly regional considerations. The empirical findings identify both direct FDI spillover effects as well as the effects of agglomeration on these externalities. In extension of this, the analysis also contains analysis of FDI productivity effects that arise through inter-firm linkages between FDI and local Mexican suppliers.
'After two decades of intensive work on FDI covering a myriad of countries and topics, this impressive book proposes a unified methodology and consistent data for one country, Mexico. This integrative work rebukes part of the received wisdom on FDI externalities, confirms others, and opens avenue for further research. A must-read for anyone interested in FDI externalities.' Gilles Duranton, Professor of Economics and Noranda Chair in International Trade and Development, University of Toronto. 'Using the case of FDI to Mexico, this excellent book not only provides many new results as to the impact of FDI on the Mexican economy but it also convincingly shows the importance of space or agglomeration in assessing the role of FDI. The book goes to the heart of modern FDI research by building on international economics, international business and economic geography. This timely and well-written book will be of great interest to all students and researchers of FDI.' Harry Garretsen, University of Groningen, The Netherlands 'The author highlights the important issues that determine the impacts of FDI flows. It is rare to find all of the issues discussed in this text considered within a consistent framework. Finally, it is notable that the author seeks to allow for endogeneity of inward investment within the spillovers process.' Professor Nigel Driffield, Economics and Strategy Group, Aston University, UK
Contents: Preface; Foreign direct investment in Mexico: externalities and geographical space; FDI externalities in host economies: heterogeneity, technology gap and geographical space; Agglomeration and FDI location in Mexican regions; Trade liberalisation and regional growth in Mexico: how important are agglomeration economies and foreign direct investment?; Intra-industry FDI externalities in Mexican manufacturing industries: endogeneity, technology gap and agglomeration; FDI in Mexican regions: identifying the industry and geographical dimensions of FDI externalities; Foreign direct investment and backward linkages with local suppliers: survey evidence from Nuevo León; FDI externalities in Mexican manufacturing industries: main findings, policy recommendations and future research; References; Index.