IDEAS home Printed from https://ideas.repec.org/p/idb/brikps/3691.html
   My bibliography  Save this paper

Trade, Direct Investment and Production Policies

Author

Listed:
  • Machinea, José Luis
  • Vera, Cecilia

Abstract

This paper discusses the series of far-reaching structural reforms that took place in the economies of Latin America and the Caribbean during the 1990's. This set of reforms generated increases in foreign trade (particularly exports) and higher foreign direct investment. However, the growth path of the region's countries is a far cry from one of intensive, steady expansion. This document analyses possible reasons for this and posits that there is no unequivocally positive link between trade openness and economic growth, given the importance of the context and how the process of liberalization is carried out.

Suggested Citation

  • Machinea, José Luis & Vera, Cecilia, 2005. "Trade, Direct Investment and Production Policies," IDB Publications (Working Papers) 3691, Inter-American Development Bank.
  • Handle: RePEc:idb:brikps:3691
    as

    Download full text from publisher

    File URL: https://publications.iadb.org/publications/english/document/Trade-Direct-Investment-and-Production-Policies.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. J. Behrman & T.N. Srinivasan (ed.), 1995. "Handbook of Development Economics," Handbook of Development Economics, Elsevier, edition 1, volume 3, number 4.
    2. -, 2000. "Equity, development and citizenship," Libros y Documentos Institucionales, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 14969 edited by Eclac.
    3. Aizenman, Joshua & Noy, Ilan, 2006. "FDI and trade--Two-way linkages?," The Quarterly Review of Economics and Finance, Elsevier, vol. 46(3), pages 317-337, July.
    4. Venables, Anthony J. & Maloney, William & Kokko, Ari & Bravo Ortega, Claudio & Lederman, Daniel & Rigobón, Roberto & De Gregorio, José & Czelusta, Jesse & Jayasuriya, Shamila A. & Blomström, Magnus & , 2007. "Natural Resources: Neither Curse nor Destiny," IDB Publications (Books), Inter-American Development Bank, number 350.
    5. Maloney, William F. & Perry, Guillermo, 2005. "Towards an efficient innovation policy in Latin America," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), December.
    6. Henrik Hansen & John Rand, 2006. "On the Causal Links Between FDI and Growth in Developing Countries," The World Economy, Wiley Blackwell, vol. 29(1), pages 21-41, January.
    7. Balasubramanyam, V N & Salisu, M & Sapsford, David, 1996. "Foreign Direct Investment and Growth in EP and IS Countries," Economic Journal, Royal Economic Society, vol. 106(434), pages 92-105, January.
    8. Enrico Spolaore & Alberto Alesina & Romain Wacziarg, 2000. "Economic Integration and Political Disintegration," American Economic Review, American Economic Association, vol. 90(5), pages 1276-1296, December.
    9. Sachs, J-D & Warner, A-M, 1995. "Natural Resource Abundance and Economic Growth," Papers 517a, Harvard - Institute for International Development.
    10. -, 1990. "Changing production patterns with social equity: the prime task of Latin American and Caribbean development in the 1990s," Libros de la CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 37869 edited by Eclac.
    11. William Maloney & Daniel Lederman & Luis Servén, 2005. "Lessons from NAFTA: For Latin America and the Caribbean," IDB Publications (Books), Inter-American Development Bank, number 59478, February.
    12. Eduardo Levy Yeyati & Christian Daude & Ernesto Stein, 2003. "Regional Integration and the Location of FDI," Business School Working Papers doce, Universidad Torcuato Di Tella.
    13. Borensztein, E. & De Gregorio, J. & Lee, J-W., 1998. "How does foreign direct investment affect economic growth?1," Journal of International Economics, Elsevier, vol. 45(1), pages 115-135, June.
    14. Blomström, Magnus & Kokko, Ari, 2003. "The Economics of Foreign Direct Investment Incentives," EIJS Working Paper Series 168, Stockholm School of Economics, The European Institute of Japanese Studies.
    15. Alfaro, Laura & Chanda, Areendam & Kalemli-Ozcan, Sebnem & Sayek, Selin, 2004. "FDI and economic growth: the role of local financial markets," Journal of International Economics, Elsevier, vol. 64(1), pages 89-112, October.
    16. -, 2000. "Equity, development and citizenship," Documentos de posición del período de sesiones de la Comisión 14969, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    17. Krueger, Anne O., 1995. "Policy lessons from development experience since the Second World War," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 3, chapter 40, pages 2497-2550, Elsevier.
    18. David H. Romer & Jeffrey A. Frankel, 1999. "Does Trade Cause Growth?," American Economic Review, American Economic Association, vol. 89(3), pages 379-399, June.
    19. Bosch, Mariano & Lederman, Daniel & Maloney, William F., 2005. "Patenting and research and development : a global view," Policy Research Working Paper Series 3739, The World Bank.
    20. Daniel Chudnovsky & Andres Lopez & Gaston Rossi, 2008. "Foreign Direct Investment Spillovers and the Absorptive Capabilities of Domestic Firms in the Argentine Manufacturing Sector (1992-2001)," Journal of Development Studies, Taylor & Francis Journals, vol. 44(5), pages 645-677.
    21. World Bank, 2002. "Global Economic Prospects and the Developing Countries 2002," World Bank Publications - Books, The World Bank Group, number 14050, December.
    22. repec:idb:brikps:59478 is not listed on IDEAS
    23. -, 2004. "Productive development in open economies," Documentos de posición del período de sesiones de la Comisión 13092, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    24. L Alan Winters, 2004. "Trade Liberalisation and Economic Performance: An Overview," Economic Journal, Royal Economic Society, vol. 114(493), pages 4-21, February.
    25. Gustavo Bittencourt & Rosario Domingo, 2002. "Los determinantes de la IED y el impacto del MERCOSUR," Documentos de Trabajo (working papers) 0402, Department of Economics - dECON.
    26. -, 1990. "Changing production patterns with social equity: the prime task of Latin American and Caribbean development in the 1990s," Libros y Documentos Institucionales, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 37869 edited by Eclac.
    27. Maloney, William & Lederman, Daniel & Servén, Luis, 2005. "Lessons from NAFTA: For Latin America and the Caribbean," IDB Publications (Books), Inter-American Development Bank, number 345.
    28. Michael D. McKenzie, 1999. "The Impact of Exchange Rate Volatility on International Trade Flows," Journal of Economic Surveys, Wiley Blackwell, vol. 13(1), pages 71-106, February.
    29. José Antonio Ocampo & María Angela Parra, 2007. "The Dual Divergence: Growth Successes and Collapses in the Developing World Since 1980," Palgrave Macmillan Books, in: Ricardo Ffrench-Davis & José Luis Machinea (ed.), Economic Growth with Equity, chapter 4, pages 61-92, Palgrave Macmillan.
    30. J. Behrman & T.N. Srinivasan (ed.), 1995. "Handbook of Development Economics," Handbook of Development Economics, Elsevier, edition 1, volume 3, number 3.
    31. Ramos, Joseph, 2000. "Policy Directions for the New Economic Model in Latin America," World Development, Elsevier, vol. 28(9), pages 1703-1717, September.
    32. Lederman, Daniel & Maloney, William F., 2003. "Trade structure and growth," Policy Research Working Paper Series 3025, The World Bank.
    33. Harrison, Ann & Hanson, Gordon, 1999. "Who gains from trade reform? Some remaining puzzles," Journal of Development Economics, Elsevier, vol. 59(1), pages 125-154, June.
    34. Mr. Ewe-Ghee Lim, 2001. "Determinants of, and the Relation Between, Foreign Direct Investment and Growth: A Summary of the Recent Literature," IMF Working Papers 2001/175, International Monetary Fund.
    35. -, 2005. "Economic Survey of Latin America and the Caribbean 2004-2005," Estudio Económico de América Latina y el Caribe, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 1062 edited by Eclac, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Arnt Fløysand & Rune Njøs & Trond Nilsen & Vigdis Nygaard, 2017. "Foreign direct investment and renewal of industries: framing the reciprocity between materiality and discourse," European Planning Studies, Taylor & Francis Journals, vol. 25(3), pages 462-480, March.
    2. Stephanie Glover & Alan King, 2011. "Trade liberalization and import demand: The Central American experience," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 20(2), pages 199-219.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dierk Herzer & Stephan Klasen & Felicitas Nowak-Lehmann D., 2006. "In search of FDI-led growth in developing countries," Ibero America Institute for Econ. Research (IAI) Discussion Papers 150, Ibero-America Institute for Economic Research.
    2. -, 2004. "Productive development in open economies: summary," Documentos de posición del período de sesiones de la Comisión 13094, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    3. Ines TROJETTE, 2016. "The Effect Of Foreign Direct Investment On Economic Growth: The Institutional Threshold," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 43, pages 111-138.
    4. Rajneesh Narula & André Pineli, 2017. "Multinational Enterprises and Economic Development in Host Countries: What We Know and What We Don’t Know," Palgrave Studies in Impact Finance, in: Gianluigi Giorgioni (ed.), Development Finance, chapter 6, pages 147-188, Palgrave Macmillan.
    5. Harrison, Ann & Rodríguez-Clare, Andrés, 2010. "Trade, Foreign Investment, and Industrial Policy for Developing Countries," Handbook of Development Economics, in: Dani Rodrik & Mark Rosenzweig (ed.), Handbook of Development Economics, edition 1, volume 5, chapter 0, pages 4039-4214, Elsevier.
    6. -, 2004. "Productive development in open economies: summary," Libros y Documentos Institucionales, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 13094 edited by Eclac.
    7. Mouna Gammoudi & Mondher Cherif & Simplice Asongu, 2016. "FDI and Growth in the MENA countries: Are the GCC countries Different?," Working Papers of the African Governance and Development Institute. 16/015, African Governance and Development Institute..
    8. M. Ayhan Kose & Eswar Prasad & Kenneth Rogoff & Shang-Jin Wei, 2009. "Financial Globalization: A Reappraisal," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 56(2), pages 143-197.
    9. Herzer, Dierk & Klasen, Stephan & Nowak-Lehmann D., Felicitas, 2008. "In search of FDI-led growth in developing countries: The way forward," Economic Modelling, Elsevier, vol. 25(5), pages 793-810, September.
    10. Beugelsdijk, Sjoerd & Smeets, Roger & Zwinkels, Remco, 2008. "The impact of horizontal and vertical FDI on host's country economic growth," International Business Review, Elsevier, vol. 17(4), pages 452-472, August.
    11. Antoci, Angelo & Borghesi, Simone & Russu, Paolo & Ticci, Elisa, 2015. "Foreign direct investments, environmental externalities and capital segmentation in a rural economy," Ecological Economics, Elsevier, vol. 116(C), pages 341-353.
    12. Kim, Dong-Hyeon & Lin, Shu-Chin & Suen, Yu-Bo, 2013. "Investment, trade openness and foreign direct investment: Social capability matters," International Review of Economics & Finance, Elsevier, vol. 26(C), pages 56-69.
    13. Coletta Frenzel Baudisch, 2018. "Sectoral FDI and the Real Exchange Rate: The Role of Financial Development," MAGKS Papers on Economics 201828, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    14. Medvedev, Denis, 2006. "Beyond trade : the impact of preferential trade agreements on foreign direct investment inflows," Policy Research Working Paper Series 4065, The World Bank.
    15. Chakraborty, Chandana & Nunnenkamp, Peter, 2008. "Economic Reforms, FDI, and Economic Growth in India: A Sector Level Analysis," World Development, Elsevier, vol. 36(7), pages 1192-1212, July.
    16. Iamsiraroj, Sasi, 2016. "The foreign direct investment–economic growth nexus," International Review of Economics & Finance, Elsevier, vol. 42(C), pages 116-133.
    17. Bhavesh Garg & Pravakar Sahoo, 2021. "DO DIFFERENT TYPES OF CAPITAL INFLOWS HAVE DIFFERENTIAL IMPACT ON OUTPUT? Evidence from Time series and Panel Analysis," IEG Working Papers 443, Institute of Economic Growth.
    18. Kose,Ayhan & Ohnsorge,Franziska Lieselotte & Ye,Lei Sandy & Islamaj,Ergys, 2017. "Weakness in investment growth : causes, implications and policy responses," Policy Research Working Paper Series 7990, The World Bank.
    19. Tekin, Rıfat Barış, 2012. "Economic growth, exports and foreign direct investment in Least Developed Countries: A panel Granger causality analysis," Economic Modelling, Elsevier, vol. 29(3), pages 868-878.
    20. Argentino Pessoa, 2008. "Multinational Corporations, Foreign Investment, and Royalties and License Fees: Effects on Host-Country Total Factor Productivity," Notas Económicas, Faculty of Economics, University of Coimbra, issue 28, pages 6-31, December.

    More about this item

    Keywords

    LAEBA Annual Conference;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:idb:brikps:3691. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Felipe Herrera Library (email available below). General contact details of provider: https://edirc.repec.org/data/iadbbus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.