Regional Integration and Foreign Direct Investment: The Case of Latin America
CEDE Working Paper No. 2002-13
28 Pages Posted: 23 Jun 2003
Date Written: October 2002
This document explores the determinants of foreign direct investment. In particular, it considers the effect that the preferential trade agreements have had over FDI flows in Latin America, after controlling for a series of structural, institutional, political and infrastructure variables. The paper gives special attention to the impact of preferential trade agreements on diverting and creating FDI. A panel data analysis is undertaken using a gravity model with FDI data from OECD and ECLAC covering the 1980-1998 period.
Keywords: International trade, Preferential trade agreements, Foreign direct investment, Creation of FDI, Diversion of FDI, Dilution of FDI, Gravity model
JEL Classification: F20, F21, F22
Suggested Citation: Suggested Citation