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Foreign Direct Investment In Latin America: A Panel Regression Study

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  • Rahim M. Quazi

Abstract

Since the early 1980s developing countries have generally experienced a heavy influx of foreign capital, and among the developing regions, Latin America has emerged as a prime destination of FDI. An extensive literature has evolved on the inflow of FDI in Latin America, which identifies a number of variables, such as market size, trade openness, etc., as the key determinants of FDI. Due to nonavailability of reliable and consistent data, domestic investment climate as a determinant of FDI has been generally excluded from the literature. This study seeks to fill that void by using the Economic Freedom Index, published since 1995 by The Heritage Foundation, as a proxy for domestic investment climate for a sample of 18 Latin American countries over 1995-2004 period. Employing panel regression methodologies, this study finds that economic freedom is a significant and robust determinant of FDI in Latin America. This study also finds that NAFTA has created an insignificant locational advantage for Mexico vis-a-vis other countries in the sample.

Suggested Citation

  • Rahim M. Quazi, 2007. "Foreign Direct Investment In Latin America: A Panel Regression Study," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 1(1), pages 59-67.
    • Handle: RePEc:ibf:ijbfre:v:1:y:2007:i:1:p:59-67
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    Cited by:

    1. Simona Andreea Apostu & Valentina Vasile & Erika Marin & Elena Bunduchi, 2022. "Factors Influencing Physicians Migration—A Case Study from Romania," Mathematics, MDPI, vol. 10(3), pages 1-24, February.
    2. Kashif Munir & Mehwish Iftikhar, 2021. "Impact of Transport and Technological Infrastructure in Attracting FDI in Pakistan," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 7, pages 93-106.
    3. Dorota Wawrzyniak, 2010. "Determinanty lokalizacji bezpośrednich inwestycji zagranicznych," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 4, pages 89-111.
    4. Dorota Wawrzyniak, 2017. "Rynek pracy a bezpośrednie inwestycje zagraniczne w krajach Europy Środkowo-Wschodniej," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 1, pages 53-68.
    5. Wyrwa Joanna, 2019. "Analysis of determinants of the inflow of foreign direct investment to Poland. Part I – theoretical considerations," Management, Sciendo, vol. 23(2), pages 238-262, December.
    6. Chibalamula, Haggai Chibale & Evans, Yeboah & Kachelo, Mukuka & Bamwesigye, Dastan, 2023. "The Effect of Foreign Direct Investment and Trade Openness on Economic Growth: Evidence from Five African Countries," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 15(1), January.
    7. Fosu, Prince, 2016. "Infrastructure and Foreign Direct Investment Inflows: Evidence from Ghana," MPRA Paper 100375, University Library of Munich, Germany, revised 13 May 2020.
    8. Liliya UKRAYINETS, 2019. "Chinese FDI to Ukraine in the context of road and belt initiative," Eastern European Journal for Regional Studies (EEJRS), Center for Studies in European Integration (CSEI), Academy of Economic Studies of Moldova (ASEM), vol. 5(1), pages 62-77, June.

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