Multinational Corporations and the North American Free Trade Agreement

Multinational Corporations and the North American Free Trade Agreement

Multinational Corporations and the North American Free Trade Agreement

Multinational Corporations and the North American Free Trade Agreement

Synopsis

This study provides a timely and useful benchmark for analysis of the effects of the recently negotiated North American Free Trade Agreement on investment flows. It also presents a unified history of foreign investment in Canada, Mexico, and the United States over the twentieth century, stressing interactions among these countries and their changing policies towards inward and outward investment. Twomey analyzes economic theories of foreign investment from the perspectives of neoclassical economics and political science and places them in the context of the ongoing debate over neo-protectionist policies and the role of the United States in the global economy.

Excerpt

This book analyzes and compares the experiences of Canada, Mexico, and the United States with regard to foreign direct investment. the ultimate goal is to sketch out possible scenarios for movements in capital among the three countries as a result of the signing of a free trade agreement. Preparatory to that, some of the major theoretical paradigms treating foreign investment will be reviewed. a major part of our effort is devoted to discussions of these countries' differing experiences with foreign direct investment (hereafter, FDI). the United States has been the major source of fdi, and Canada and Mexico are among its most important recipients. a substantially historical perspective is required to put into context the rapid economic changes presently occurring. the effort is made to use the same methodological approach for the analysis of the three countries. Frequently, greater attention will be focused on Mexico; at any party there is always more interest in the newcomer.

As the subject of an academic study, this is a rather unusual mixture, given the different levels of economic development among these three countries, their radically different histories, and the corresponding dissimilarities in the published literature. Moreover, approaches to the topic of foreign investment are highly polarized. the major justification for the study is, of course, the likelihood that these three countries will soon be joined together in a free trade agreement that will substantially increase trade and investment flows.

Additionally, their histories are intimately tied together--at a minimum, all commentators would agree with Michael Hart (1990: 31), "Although Mexico is unlike Canada in most respects, the two countries do share a long history of trying to live in harmony with, but distinct from, the United States." Furthermore, the three countries present markedly distinct models of foreign investment; Canada's has been an import substituting fdi attracted by protective tariffs, Mexico is gearing up to host fdi for the manufacture of exports, while the United States is currently receiving vast amounts of new types of fdi oriented . . .

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