The incidence of Foreign Direct Investment in Latin American economic growth: An econometric analysis = La incidencia de la Inversión extranjera directa en el crecimiento económico Latinoamericano: Un análisis econométrico
Does Foreign Direct Investment (FDI) have a positive effect on economic growth in recipient countries? The debate about the positive impact of FDI on economic growth remains open, and therefore the formulation of economic policy in developing regions such as Latin America and the Caribbean is still a dilemma between to adopting policies that support economic openness or implementing policies aimed at promoting the protection of domestic markets. However, in recent years Latin America has been leaning towards policies that promote FDI inflows so as to stimulate market growth and to increase the competitiveness in different branches of economic activity. From this argument, the following thesis investigates the impact of FDI on the growth of Latin American developing economies by presenting an econometric analysis through the application of an OLS pooled panel data analysis for 19 Latin American countries between 1980 and 2010. The result of the research aims to test the hypothesis that establishes a positive relation between FDI inflows and economic growth. To do so, the relation FDI-growth is examined by the use of different control variables related with macroeconomic stability, trade openness, political stability, per capita GDP, and secondary schooling. The results of this research reveal a positive effect of FDI on the economic growth rate of the countries taken in the sample of the study.
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