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Sociopolitical and judicial factors as determinants of private investment in Latin America

Author

Listed:
  • Rafael Alexis Acevedo Rueda

    (Profesor instructor, Universidad Yacambú y Universidad Nacional Experimental de las Fuerzas Armadas (UNEFA).)

  • José U. Mora Mora

    (Profesor visitante (2007-2009), University of Vermont y profesor del Departmento de Economía, Universidad de Los Andes)

Abstract

This paper studies the relationship between social-political and judicial factors and private investment in Latin America during 1995-2003 by means of panel data analysis. The empirical evidence suggests that investment rate differentials, not only among Latin American countries but also with developed countries might have been caused by these factors. Countries with a neutral and strong judicial system might see their investment rates increase by as much as 2.29 percentage points. Regarding the social-political factor, it is worth to emphasize that significant improvement in political institutions, control on corruption, and better access to political and civil rights could cause the investment rate to increase by 1.84 percentage points. At last, if Latin American countries want to attract new investments, increase their economic growth possibilities, and improve their population standard of living, their governments must start working on the strengthening and creation of political institutions that permit to abolish or at least diminish corruption levels, civil rights repression, the loss of political rights, and on enhancing the judicial system.

Suggested Citation

  • Rafael Alexis Acevedo Rueda & José U. Mora Mora, 2008. "Sociopolitical and judicial factors as determinants of private investment in Latin America," Economía, Instituto de Investigaciones Económicas y Sociales (IIES). Facultad de Ciencias Económicas y Sociales. Universidad de Los Andes. Mérida, Venezuela, vol. 33(26), pages 93-118, july-dece.
    • Handle: RePEc:ula:econom:v:33:y:2008:i:26:p:93-118
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    References listed on IDEAS

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    More about this item

    Keywords

    Private investment; institutions; political stability; Latin American economies; panel data.;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • N46 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Latin America; Caribbean
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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