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Sociopolitical and judicial factors as determinants of private investment in Latin America

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  • Rafael Alexis Acevedo Rueda

    ()
    (Profesor instructor, Universidad Yacambú y Universidad Nacional Experimental de las Fuerzas Armadas (UNEFA).)

  • José U. Mora Mora

    ()
    (Profesor visitante (2007-2009), University of Vermont y profesor del Departmento de Economía, Universidad de Los Andes)

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    Abstract

    This paper studies the relationship between social-political and judicial factors and private investment in Latin America during 1995-2003 by means of panel data analysis. The empirical evidence suggests that investment rate differentials, not only among Latin American countries but also with developed countries might have been caused by these factors. Countries with a neutral and strong judicial system might see their investment rates increase by as much as 2.29 percentage points. Regarding the social-political factor, it is worth to emphasize that significant improvement in political institutions, control on corruption, and better access to political and civil rights could cause the investment rate to increase by 1.84 percentage points. At last, if Latin American countries want to attract new investments, increase their economic growth possibilities, and improve their population standard of living, their governments must start working on the strengthening and creation of political institutions that permit to abolish or at least diminish corruption levels, civil rights repression, the loss of political rights, and on enhancing the judicial system.

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    File URL: ftp://iies.faces.ula.ve/Pdf/Revista26/Rev26Acevedo.pdf
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    Bibliographic Info

    Article provided by Instituto de Investigaciones Económicas y Sociales (IIES). Facultad de Ciencias Económicas y Sociales. Universidad de Los Andes. Mérida, Venezuela in its journal Economia.

    Volume (Year): 33 (2008)
    Issue (Month): 26 (july-december)
    Pages: 93-118

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    Handle: RePEc:ula:econom:v:33:y:2008:i:26:p:93-118

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    Postal: Facultad de Ciencias Económicas y Sociales. Instituto de Investigaciones Económicas y Sociales. Campus Universitario Liria, Edificio G, Tercer Nivel. Mérida 5101, Estado Mérida, Venezuela
    Phone: +58 74 401111 ext. 1081
    Fax: +58 74 401120
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    Web page: http://iies.faces.ula.ve/
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    Related research

    Keywords: Private investment; institutions; political stability; Latin American economies; panel data.;

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    1. Alesina, Alberto F & Rodrik, Dani, 1991. "Distributive Politics and Economic Growth," CEPR Discussion Papers 565, C.E.P.R. Discussion Papers.
    2. Marie-Ange VEGANZONES-VAROUDAKIS & NABLI & Ahmet Faruk AYSAN, 2006. "Governance and Private Investment in the Middle East and North Africa," Working Papers 200627, CERDI.
    3. Peter C.B. Phillips & Hyungsik R. Moon, 1999. "Linear Regression Limit Theory for Nonstationary Panel Data," Cowles Foundation Discussion Papers 1222, Cowles Foundation for Research in Economics, Yale University.
    4. Kao, Chihwa, 1999. "Spurious regression and residual-based tests for cointegration in panel data," Journal of Econometrics, Elsevier, vol. 90(1), pages 1-44, May.
    5. Pedroni, Peter, 1999. " Critical Values for Cointegration Tests in Heterogeneous Panels with Multiple Regressors," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(0), pages 653-70, Special I.
    6. Quan V. Le, 2004. "Political and economic determinants of private investment," Journal of International Development, John Wiley & Sons, Ltd., vol. 16(4), pages 589-604.
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