Regional Integration and Foreign Direct Investment: The Case of Latin America

Vallejo, Hernan; Aguilar, Camila

doi:10.2139/ssrn.393920

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Regional Integration and Foreign Direct Investment: The Case of Latin America

CEDE Working Paper No. 2002-13

28 Pages Posted: 23 Jun 2003

See all articles by Hernan Vallejo

Camila Aguilar

Universidad de los Andes, Colombia - Department of Economics

Date Written: October 2002

Abstract

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

Vallejo, Hernan and Aguilar, Camila, Regional Integration and Foreign Direct Investment: The Case of Latin America (October 2002). CEDE Working Paper No. 2002-13, Available at SSRN: https://ssrn.com/abstract=393920 or http://dx.doi.org/10.2139/ssrn.393920