DETERMINANTES DO INVESTIMENTO DIRETO EXTERNO (IDE) NA AMÉRICA LATINA: UMA PERSPECTIVA INSTITUCIONAL

The purpose of this study is to build and estimate a model to assess the determinants of Foreign Direct Investment (FDI) in Latin America and also for a larger group of emerging market countries. Based on a panel data model for seven Latin American Countries over the period of 1984-2001, we estimate the FDI model. The estimation results indicate that FDI inflows to Latin America are determined by the lagged GDP (gross domestic product), as a proxy of the market size of the host country, by real exchange rate and by institutional variables, which include political risk, freedom and regional integration agreements. Thus, we find that the quality of institutions has positive effects on FDI. The impact of economic reforms, political risk and regional integration is statistically significant, and economically important to adjust the investment strategies of Multinational Companies in the region.