Economic Partnership Agreement Mexico-Japan and Its Impact on Foreign Direct Investment: A Strategic Analysis

Abstract

This chapter is intended to analyze the advantages to associate with a developing country like México from the perspective of the theories of the Agency, Institutional, Resource-based Theory and the Theory of Transaction Costs. Generally, FDI contributes to capital formation, expansion and diversification of exports, increasing competition, provide access to top technology and improving management systems. Mexico is of the largest FDI recipients within the developing countries. Japan, on the other hand, is one of the largest sources of FDI worldwide, and is gaining a larger share in the Mexican FDI context since the onset of the Economic Partnership Agreement. In this paper, factors that might lead to the depletion of productive spillovers from Japanese manufacturing companies are reviewed from a qualitative perspective. The analysis suggests that inefficiencies in endogenous companies; and Japanese companies being part of firm networks (keiretsu), might lead to productive spillovers depletion.