Foreign Direct Investment and Structural Reforms: Evidence from Eastern Europe and Latin America

Author/Editor:

Yuko Kinoshita ; Nauro F. Campos

Publication Date:

January 1, 2008

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This paper investigates the role of structural reforms -financial reforms, trade liberalization, and privatization- as determinants of FDI inflows based on newly constructed dataset on structural reforms for 19 Latin American and 25 Eastern European countries between 1989 and 2004. Our main finding is a strong empirical relationship from reforms to FDI, in particular, from financial liberalization and privatization. These results are robust to different measures of reforms, split samples, and potential endogeneity and omitted variables biases.

Series:

Working Paper No. 2008/026

Subject:

Financial sector development Foreign direct investment Privatization Structural reforms Trade liberalization

English

Publication Date:

January 1, 2008

ISBN/ISSN:

9781451868883/1018-5941

Stock No:

WPIEA2008026

Pages:

38

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