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Foreign Direct Investment and Economic Growth in Bolivia, 1990- 1998

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  • Nikolai Flexner

    (Fulbright Researcher-Central Bank of Bolivia)

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    Abstract

    This paper employs ordinary least squares (OLS) estimation to examine the determinants of foreign direct investment (FDI) and the effect of FDI on per capita GDP growth in Bolivia over the period 1990:1-1998:4. The regression results find that the real effective multilateral exchange rate, the ratio of external debt to GDP, and a dummy representing capitalization inflows significantly impact FDI, while FDI, along with the terms-of-trade, the ratio of private sector credit to GDP, and the ratio of government spending to GDP are shown to have a statistically significant impact on per capita GDP growth. The exclusion of capitalization inflows from total FDI in the FDI determinants model has very little impact on the overall results.

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    File URL: http://128.118.178.162/eps/mac/papers/0309/0309009.pdf
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    Bibliographic Info

    Paper provided by EconWPA in its series Macroeconomics with number 0309009.

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    Length: 28 pages
    Date of creation: 05 Sep 2003
    Date of revision: 26 Nov 2003
    Handle: RePEc:wpa:wuwpma:0309009

    Note: Type of Document - Acrobat PDF; prepared on IBM PC; to print on HP; pages: 28 ; figures: included
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    Web page: http://128.118.178.162

    Related research

    Keywords: Bolivia; Foreign Direct Investment; Economic Growth; Privatization; Capitalization;

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    References

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    1. Corbo, Vittorio & Hernandez, Leonardo, 1996. "Macroeconomic Adjustment to Capital Inflows: Lessons from Recent Latin American and East Asian Experience," World Bank Research Observer, World Bank Group, World Bank Group, vol. 11(1), pages 61-85, February.
    2. Jose De Gregorio, 1991. "Economic Growth in Latin America," IMF Working Papers 91/71, International Monetary Fund.
    3. Linda S. Goldberg & Michael W. Klein, 1997. "Foreign Direct Investment, Trade and Real Exchange Rate Linkages in Developing Countries," NBER Working Papers 6344, National Bureau of Economic Research, Inc.
    4. Michael Gavin & Ricardo Hausmann & Leonardo Leiderman, 1995. "Macroeconomics of Capital Flows to Latin America: Experience and Policy Issues," Research Department Publications 4012, Inter-American Development Bank, Research Department.
    5. Eliane A. Cardoso & Ilan Goldfajn, 1997. "Capital Flows to Brazil-The Endogeneity of Capital Controls," IMF Working Papers 97/115, International Monetary Fund.
    6. Bruno, Michael & Easterly, William, 1995. "Inflation crises and long-run growth," Policy Research Working Paper Series 1517, The World Bank.
    7. Robert J. Barro, 1996. "Determinants of Economic Growth: A Cross-Country Empirical Study," NBER Working Papers 5698, National Bureau of Economic Research, Inc.
    8. Lothian, James R & Taylor, Mark P, 1996. "Real Exchange Rate Behavior: The Recent Float from the Perspective of the Past Two Centuries," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 104(3), pages 488-509, June.
    9. Velasco, Andres, 1996. "Animal spirits, investment and international capital movements," Journal of International Money and Finance, Elsevier, vol. 15(2), pages 221-237, April.
    10. Fernandez-Arias, Eduardo & Montiel, Peter J, 1996. "The Surge in Capital Inflows to Developing Countries: An Analytical Overview," World Bank Economic Review, World Bank Group, World Bank Group, vol. 10(1), pages 51-77, January.
    11. Michael Gavin & Ricardo Hausmann & Leonardo Leiderman, 1995. "The Macroeconomics of Capital Flows to Latin America: Experience and Policy Issues," IDB Publications 5821, Inter-American Development Bank.
    12. Barja, Gover, 1999. "Inversión y productividad en la industria boliviana de la electricidad
      [Investment and productivity in the bolivian electricity industry]
      ," MPRA Paper 23461, University Library of Munich, Germany.
    13. King, Robert G. & Levine, Ross, 1993. "Finance and growth : Schumpeter might be right," Policy Research Working Paper Series 1083, The World Bank.
    14. Classens, S. & Dooley, M.P. & Warner, A., 1995. "Portfolio Capital Flows: Hot or Cold," Papers 501, Harvard - Institute for International Development.
    15. Margaret S. McMillan, 1999. "Foreign Direct Investment: Leader or Follower?," Discussion Papers Series, Department of Economics, Tufts University 9901, Department of Economics, Tufts University.
    16. Sachs, Jeffrey, 1987. "The Bolivian Hyperinflation and Stabilization," American Economic Review, American Economic Association, vol. 77(2), pages 279-83, May.
    17. repec:fth:wobaco:1083 is not listed on IDEAS
    18. Leonardo Leiderman & Carmen Reinhart & Guillermo Calvo, 1992. "Capital Inflows and Real Exchange Rate Appreciation in Latin America," IMF Working Papers 92/62, International Monetary Fund.
    19. Easterly, William & Loayza, Norman & Montiel, Peter, 1997. "Has Latin America's post-reform growth been disappointing?," Journal of International Economics, Elsevier, vol. 43(3-4), pages 287-311, November.
    20. repec:fth:inadeb:310 is not listed on IDEAS
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