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

40 Pages Posted: 4 Feb 2008

See all articles by Nauro F. Campos

Nauro F. Campos

University College London; University of Michigan at Ann Arbor - The William Davidson Institute; IZA Institute of Labor Economics

Yuko Kinoshita

International Monetary Fund (IMF); University of Michigan, William Davidson Institute; Centre for Economic Policy Research (CEPR)

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Date Written: Janurary 2008

Abstract

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.

Keywords: Foreign direct investment, Central and Eastern Europe, Latin America, Trade liberalization, Privatization

Suggested Citation

Campos, Nauro F. and Kinoshita, Yuko, Foreign Direct Investment and Structural Reforms: Evidence from Eastern Europe and Latin America (Janurary 2008). IMF Working Paper No. 08/26, Available at SSRN: https://ssrn.com/abstract=1089692

Nauro F. Campos (Contact Author)

University College London ( email )

Gower Street
London, WC1E 6BT
United Kingdom

University of Michigan at Ann Arbor - The William Davidson Institute

724 E. University Ave.
Wyly Hall
Ann Arbor, MI 48109-1234
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Yuko Kinoshita

International Monetary Fund (IMF) ( email )

700 19th Street N.W.
Washington, DC 20431
United States
202-623-5442 (Phone)
202-623-6069 (Fax)

University of Michigan, William Davidson Institute

724 E. University Ave.
Wyly Hall
Ann Arbor, MI 48109-1234
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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