The Determinants of Foreign Direct Investment in Brazil and Mexico: An Empirical Analysis

AbstractThis paper analyzes the foreign direct investment determinants in Brazil and Mexico during the period 1990 to 2010, in order to identify common and divergent characteristics that affect FDI's attraction. For this purpose, it was constructed an analytical model estimated using the Vector Error Correction Model (VEC). From the results, it was noted that in Brazil the main multinationals’ strategy is the market seeking - linked to the size of the domestic market-, and, in Mexico, the dominant strategy seems to be efficiency seeking, related to the importance of trade liberalization and the historical flows to attract FDI