CAFTA-DR effects on FDI inflows, growth and distribution of the workforce in Costa Rica : a system dynamics approach
Date
2010-10
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Routledge
Abstract
As regional trading arrangements have spread, enlarged and deepened over the last decades, the study of the relation between trade agreements and foreign direct investment still presents difficulties due to the multi-dimensional character of such relationship. This paper attempts to shed new light on how some of the Central American Free Trade (CAFTA) policies will impact FDI inflows on the manufacturing and agricultural sectors in Costa Rica. Specifically we look at how the growth and distribution of the workforce is affected by the treaty. The results show that the agreement provisions will have a positive effect on foreign direct investment. From these results it is possible to estimate that in the long run, the implementation of CAFTA has a higher probability of generating the intended benefits. System dynamics modelling is used in this paper.
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Article