In this paper a simple model of foreign direct investment is developed and tested on investment flows from the USA to Mexico between 1967 and 1994 using cointegration analysis. Domestic demand and relative factor costs are found to influence direct investment flows, suggesting support for both...

This article develops a model which tests the hypothesis that sectoral FDI flows from the United States to Mexico over a four-year period can be explained by the ownership advantages of US multinationals. Theoretical developments in the concept of 'ownership advantage' are used to guide the...