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Foreign Direct Investment and Structural Reforms: Evidence from Eastern Europe and Latin America

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  • Nauro Campos
  • Yuko Kinoshita

Abstract

This paper investigates the role of structural reforms ??? privatization, financial reform and trade liberalization??? as determinants of FDI inflows based on newly constructed dataset on structural reforms for 19 Latin American and 25 Eastern European countries between 1989 and 2004. Our main finding is a strong empirical relationship from reforms to FDI, in particular, from financial liberalization and privatization. These results are robust to different measures of reforms, split samples, and potential endogeneity and omitted variables biases.

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  • Nauro Campos & Yuko Kinoshita, 2008. "Foreign Direct Investment and Structural Reforms: Evidence from Eastern Europe and Latin America," William Davidson Institute Working Papers Series wp906, William Davidson Institute at the University of Michigan.
    • Handle: RePEc:wdi:papers:2008-906
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    More about this item

    Keywords

    privatization; financial reform; trade liberalization; foreign direct investment; Latin America; transition economies;
    All these keywords.

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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