Foreign Direct Investment, Economic Freedom and Growth: New Evidence from Latin-America

Universidad de Cantabria, Economics Working Paper No. 4/03

32 Pages Posted: 22 Jan 2003

See all articles by Blanca Sanchez-Robles

Blanca Sanchez-Robles

UNED, Departamento de Análisis Económico

Marta Bengoa-Calvo

Colin Powell School for Civic and Global Leadership and City University of New York

Multiple version iconThere are 2 versions of this paper

Date Written: November 2002

Abstract

This paper explores empirically the interplay between economic freedom, Foreign Direct Investment (FDI) and growth. We pursue a panel data analysis on a sample of 18 Latin-American countries over the period 1970-1999. Basic findings are two: First, economic freedom in the host country is found to be a positive determinant of FDI inflows into that nation. Second, FDI is positively correlated with economic growth in the host countries of the sample considered. We attribute this empirical regularity to the idea that FDI may help the process of technological diffusion from leaders to developing countries. The empirical analysis also points out to the need of a certain level of social capacity in the host country to benefit from the entrance of FDI.

Keywords: foreign direct investment, economic freedom, economic growth, technological diffusion

JEL Classification: 040

Suggested Citation

Sanchez-Robles, Blanca and Bengoa-Calvo, Marta, Foreign Direct Investment, Economic Freedom and Growth: New Evidence from Latin-America (November 2002). Universidad de Cantabria, Economics Working Paper No. 4/03. Available at SSRN: https://ssrn.com/abstract=353940 or http://dx.doi.org/10.2139/ssrn.353940

Blanca Sanchez-Robles (Contact Author)

UNED, Departamento de Análisis Económico ( email )

Paseo de la Senda del Rey 11
MADRID, Madrid 28040
Spain

Marta Bengoa-Calvo

Colin Powell School for Civic and Global Leadership and City University of New York ( email )

160 Convent Av
New York, NY 10031
United States

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