Foreign Direct Investment and Structural Reforms: Evidence from Eastern Europe and Latin America
IMF Working Papers, January 1, 2008
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Bibliographic details
- Authors: Yuko Kinoshita, Nauro F. Campos
- Published: January 1, 2008
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451868883.001
Summary
- Study investigates the role of structural reforms—financial reforms, trade liberalization, and privatization—as determinants of FDI inflows.
- Analysis is based on a newly constructed dataset on structural reforms for 19 Latin American and 25 Eastern European countries between 1989 and 2004.
- Main finding: a strong empirical relationship from reforms to FDI, in particular, from financial liberalization and privatization.
- Results are reported to be robust to different measures of reforms, split samples, and potential endogeneity and omitted variables biases.
Dataset and Scope
- Geographic coverage: 19 Latin American countries; 25 Eastern European countries.
- Time period analyzed: between 1989 and 2004.
- Reform types examined: financial reforms, trade liberalization, privatization.
Key Empirical Findings
- Strong empirical relationship from structural reforms to FDI inflows.
- Financial liberalization: identified as a significant determinant of increased FDI inflows.
- Privatization: identified as a significant determinant of increased FDI inflows.
- Trade liberalization: examined alongside other reforms (summary emphasizes financial liberalization and privatization as particularly important).
Robustness and Reliability
- Findings reported as robust to:
- Different measures of reforms.
- Split samples.
- Potential endogeneity and omitted variables biases.
Subject Classification and Keywords
- Subject areas: Financial sector development, Foreign direct investment, Privatization, Structural reforms, Trade liberalization.
- Keywords: FDI flow, FDI inflow, WP.
Source: Yuko Kinoshita and Nauro F. Campos, "Foreign Direct Investment and Structural Reforms: Evidence from Eastern Europe and Latin America", IMF Working Papers, January 1, 2008.