 Determinants of FDI in the Chilean Case: A FMOLS Analysis, 1970-2016Applied Economics and Finance, 2022, vol. 9, issue 4, 2235 Abstract: This paper examines some of the major economic and institutional determinants of foreign direct investment (FDI) flows to Chile during the 2000s. It reports econometric results which suggest that standard economic variables and major changes in the institutional-legal status of foreign capital are, in large measure, responsible for the rapid increase in FDI flows to leading sectors of the Chilean economy. Cointegration analysis in the presence of structural breaks and FMOLS estimates for the 1970-2016 period suggest that market size, the real exchange rate, the debt-service ratio, education, physical infrastructure, and the Fraser Institute’s economic freedom index are economically significant in explaining the variation in the stock of net FDI to the country. Dummy variables, designed to capture qualitative factors such as the impact of economic crises and institutional reforms, are also included and they have their anticipated signs and are statistically significant. The paper also addresses the long-term negative effects of rapidly growing profit and dividend remittances on the financing of capital formation and the Chilean balance of payments in recent years. Date: 2022 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:rfa:aefjnl:v:9:y:2022:i:4:p:2235 Access Statistics for this article More articles in Applied Economics and Finance from Redfame publishing Contact information at EDIRC. |
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