Abstract

ELIZALDE GUZMAN, Héctor Paulino; MARTINEZ DAMIAN, Miguel Ángel; ARANA CORONADO, José Jaime  and  RAMIREZ GUZMAN, Martha Elva. Country-Risk Impact on Foreign Direct Investment in Mexico. Ens. Rev. econ. [online]. 2022, vol.41, n.1, pp.1-16.  Epub Feb 28, 2023. ISSN 2448-8402.  https://doi.org/10.29105/ensayos41.1-1.

A greater flow of foreign direct investment (FDI) in Mexico can serve as financing for the manufacture of goods and services that contribute to economic growth; however, investors face risks that can lead to low levels of profits or even losses. Through a transfer model, this document aims to reveal the relationship between the Country Risk Index (IRP) and FDI in Mexico, and thereby contribute to knowledge about the behavior of foreign capital. The results confirmed the inverse relationship between these variables; Likewise, the cross-correlation function indicates that the IRP has a lagged effect of four quarters on FDI. Therefore, if this country wants to position itself as a viable alternative for foreign capital and benefit from long-term investments, policies that place it as a low-risk economy should be implemented.

Keywords : Foreign Direct Investment; Country Risk Index; Transfer; Inverse Relationship.

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