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Does it Make a Difference? Comparing Growth Effects of European and North American FDI in Latin America

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Author Info
Tondl, Gabriele
Prüfer, Patricia

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Abstract

FDI from the European Union (EU) ranks before FDI from North America (NA) in some of the Latin American countries. We investigate the impact of EU- versus NA-FDI on the growth rate including about 50 controls. Country specific effects and parameter heterogeneity are incorporated in our estimation. We use Bayesian Model Averaging to address model uncertainty and to select the best models and most robust parameters. Our results indicate that positive effects of FDI are dependent on the functioning of legal frameworks and the quality of infrastructure. EU-FDI is an important, robust growth determinant whereas NA-FDI is not.

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Paper provided by Verein für Socialpolitik, Research Committee Development Economics in its series Proceedings of the German Development Economics Conference, Göttingen 2007 with number 26.

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Date of creation: 2007
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Handle: RePEc:zbw:gdec07:6549

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Related research
Keywords: Growth determinants; FDI; model uncertainty; Bayesian Model Averaging; Latin America;

Find related papers by JEL classification:
F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
O54 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean
C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation and Testing
F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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  1. Dalila NICET- CHENAF (GREThA UMR CNRS 5113) & Eric ROUGIER (GREThA UMR CNRS 5113), 2008. "Recent exports matter: export discoveries, FDI and Growth, an empirical assessment for MENA countries," Cahiers du GREThA 2008-22, Groupe de Recherche en Economie Théorique et Appliquée. [Downloadable!]
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