Foreign direct investment in Mexico, crime, and economic forces

Authors

• René Cabral, Tecnologico de Monterrey
• André Varella Mollick, The University of Texas Rio Grande ValleyFollow
• Eduardo Saucedo, Tecnologico de Monterrey

Document Type

Article

Publication Date

2019

Abstract

This paper re-examines inflows of foreign direct investment (FDI) in the 32 subnational Mexican states based on quarterly data from 2005 to 2015, which includes rising drug-related crimes. We estimate our models using panel data methods by type of crime, state-level indicators (real wages and electricity consumption), macroeconomic forces (the real exchange rate and interest rate), and a dummy variable for the financial crisis of 2008–2009. We employ a flexible lag-length method and find that homicides and thefts have negative and statistically significant effects on FDI, while other crimes have no effects. Subsample work suggests higher negative effects in the most violent states.

Comments

© 2018 Western Economic Association International.

https://onlinelibrary.wiley.com/share/E8DMDZIPFX2XFUA5UPKQ?target=10.1111/coep.12401

Recommended Citation

Cabral, R., Mollick, A.V. and Saucedo, E., 2019. Foreign direct investment in Mexico, crime, and economic forces. Contemporary Economic Policy, 37(1), pp.68-85. https://doi.org/10.1111/coep.12401

Publication Title

Contemporary Economic Policy

DOI

10.1111/coep.12401