Foreign Direct Investment and child mortality: Mexico in the early NAFTA years

Many economists argue that trade liberalization should raise the incomes of the poor in developing countries and lead to consequent improvements in standard of living (SoL). Among measures of SoL, child mortality is one of the most sensitive to change. A series of analyses were completed to understand how trade liberalization through foreign direct investment (FDI) affected under-five mortality rates (U5MR) in Mexico during the 1994-1999 span of the North American Free Trade Agreement (NAFTA). Measures employed here include (1) state-level NAFTA FDI, (2) women's wealth, and (3) U5MR. Ecological linear regression models were employed to assess the relationship between state-level FDI and U5MR. Negative binomial regression models were employed to assess how FDI, state, maternal age, urban-rural status, and maternal language affected an individual woman's probability of losing a child. We find that (1) at the ecological-level, FDI is associated with U5MR, (2) there is no evidence of an association between changing FDI and U5MR, and (3) state characteristics are collinear with FDI levels, making it impossible to isolate the FDI effect on individuals. Implications of these novel results and the broader issue of how global trade policy affects health will be discussed.