Foreign Direct Investment
Why Track Foreign Direct Investment?
Foreign Direct Investment (FDI) is a key characteristic of international economic integration. The importance of FDI to a host country is that it brings additional capital, creates jobs, encourages transfer of technology and know-how, and contributes to a wider promotion of products on international markets. Benefits to investor countries include access to an expanded labor force, and wider promotion of promotion of products in international markets. Mexico ranks among the top developing countries in the attraction of foreign investors seeking to expand into the NAFTA area. One of Mexico’s principal advantages over other developing countries is the proximity and access to U.S. and Canadian markets. The geographic distribution of FDI among states within Mexico is influenced by several factors including population levels, wages, educational attainment, adequacy of infrastructure, and proximity to the U.S. Accordingly, the trend in FDI at state level can be viewed as a composite indicator of that state’s attractiveness for multinational activity. From the perspective of Mexico as a host country, FDI is an international venture in which a foreign investor acquires a long-term controlling influence in the management and operation of an affiliate firm in Mexico. A common way of presenting FDI is as an aggregate nominal value of the inward flows and stock values.