Abstract

GOMEZ AGUIRRE, Regina; WINDLER MUNOZ, Lia  and  MASSA ROLDAN, Ricardo. Factors that determine foreign direct investment in Latin America: an administrative economics vision. Revista Economía y Política [online]. 2020, n.31, pp.47-66.  Epub Jan 31, 2020. ISSN 2477-9075.  https://doi.org/10.25097/rep.n31.2020.03.

The present work proposes an extension to Dunning's eclectic theory to explore the effect that variables, with an administrative economics scope, have on the behavior of foreign direct investment (FDI) flows into Mexico, Costa Rica, Panama, Brazil and Peru. Using a panel data model it is estimated that, for the period 2006-2015, variables such as the cost of enforcing a contract, the cost of registering a property, size of the banking industry and labor in the agriculture industry discourage FDI towards Latin American countries, while elements related to trade openness encourage it. In order to increase the flow of FDI into the region, it is suggested to design mechanisms that reduce transaction costs accompanied by public policies that promote competition within the local banking sector and pursue the specialization of labor.

Keywords : Investment; Governance; Latin America; Foreign Direct Investment; Panel Data.

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