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Strategic factors affecting foreign direct investment decisions by multi-national enterprises in Latin America

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  • Treviño, Len J.
  • Mixon, Franklin G.
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    Abstract

    Cross-country differences in macroeconomic and institutional environments are used to explain MNE behavior, as proxied by foreign direct investments (FDIs) inflows to seven Latin American countries, namely Argentina, Brazil, Chile, Columbia, Mexico, Peru and Venezuela for the period 1988-1999. Results indicate that the institutional approach is dominant, thus supporting recent FDI research that has included statistical measures of institutional reform in their models. Since MNEs must conform to the institutional environment prevailing in the host country, managers should undertake FDI where there is minimal institutional distance between the home and the host country environments. In addition, government officials should place increased emphasis on institutional reform if their objective is to increase inward FDI in their countries. Finally, any assistance provided by non-governmental organizations, such as the IMF and the World Bank, should also emphasize institutional reform.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of World Business.

    Volume (Year): 39 (2004)
    Issue (Month): 3 (August)
    Pages: 233-243

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    Handle: RePEc:eee:worbus:v:39:y:2004:i:3:p:233-243

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    Cited by:
    1. Nobuaki Hamaguchi & Silvio Miyazaki & Leonardo Correia, 2014. "State Space Application to Recent Automobile Sector Triangle Trade between Japan and Latin America," Discussion Paper Series DP2014-05, Research Institute for Economics & Business Administration, Kobe University.
    2. Galan, Jose I. & Gonzalez-Benito, Javier, 2006. "Distinctive determinant factors of Spanish foreign direct investment in Latin America," Journal of World Business, Elsevier, vol. 41(2), pages 171-189, June.
    3. Stoian, Carmen & Filippaios, Fragkiskos, 2008. "Dunning's eclectic paradigm: A holistic, yet context specific framework for analysing the determinants of outward FDI: Evidence from international Greek investments," International Business Review, Elsevier, vol. 17(3), pages 349-367, June.
    4. Don Kenyon & Pierre van der Eng, 2011. "From strangers to partners in the hemisphere: New Prospects in Australia’s Economic Relations with Latin America," CEPR Discussion Papers 650, Centre for Economic Policy Research, Research School of Economics, Australian National University.
    5. Arbeláez, Harvey & Ruiz, Isabel, 2013. "Macroeconomic antecedents to U.S. investment in Latin America," Journal of Business Research, Elsevier, vol. 66(3), pages 439-447.
    6. Javalgi, Rajshekhar (Raj) G. & Deligonul, Seyda & Ghosh, Amit K. & Lambert, Douglas M. & Cavusgil, S. Tamer, 2010. "Foreign market entry mode behavior as a gateway to further entries: The NAFTA experience," International Business Review, Elsevier, vol. 19(3), pages 209-222, June.
    7. Panagiotis Liargovas & Konstantinos Skandalis, 2012. "Foreign Direct Investment and Trade Openness: The Case of Developing Economies," Social Indicators Research, Springer, vol. 106(2), pages 323-331, April.
    8. Robertson, Christopher J. & Gilley, K. Matthew & Crittenden, Victoria & Crittenden, William F., 2008. "An analysis of the predictors of software piracy within Latin America," Journal of Business Research, Elsevier, vol. 61(6), pages 651-656, June.

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