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

Nauro F. Campos
Brunel University - Economics and Finance; Centre for Economic Policy Research (CEPR); University of Michigan at Ann Arbor - The William Davidson Institute; Institute for the Study of Labor (IZA)

Yuko Kinoshita
International Monetary Fund (IMF); University of Michigan, William Davidson Institute; Centre for Economic Policy Research (CEPR)

IZA Working Paper No. 3332

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.

Keywords: privatization, financial reform, trade liberalization, foreign direct investment, Latin America, transition economies

JEL Classifications: H11, F21, O16

Working Paper Series

Date posted: May 23, 2008 ; Last revised: May 23, 2008

Suggested Citation

Campos, Nauro F. and Kinoshita, Yuko, Foreign Direct Investment and Structural Reforms: Evidence from Eastern Europe and Latin America. , Vol. , pp. -, . Available at SSRN: http://ssrn.com/abstract=1135908 or doi:10.1111/j.0042-7092.2007.00700.x

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Contact Information

Nauro F. Campos (Contact Author) Brunel University - Economics and Finance ( email ) Uxbridge UB8 3PH United Kingdom
Centre for Economic Policy Research (CEPR) 90-98 Goswell Road London EC1V 7RR United Kingdom
University of Michigan at Ann Arbor - The William Davidson Institute 724 E. University Ave. Wyly Hall Ann Arbor, MI 48109-1234 United States
Institute for the Study of Labor (IZA) P.O. Box 7240 D-53072 Bonn Germany
Yuko Kinoshita International Monetary Fund (IMF) ( email ) 700 19th Street N.W. Washington, DC 20431 United States 202-623-5442 (Phone) 202-623-6069 (Fax)
University of Michigan, William Davidson Institute 724 E. University Ave. Wyly Hall Ann Arbor, MI 48109-1234 United States
Centre for Economic Policy Research (CEPR) 90-98 Goswell Road London EC1V 7RR United Kingdom