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Effects Of Real Exchange Rate On Foreign Direct Investment By Using Gravity Model In Latin America And Caribbean

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  • Martin Kocúrek

    (Faculty of National Economy, University of Economics in Bratislava)

Abstract

This paper analyses the issue of RER and its impact on FDI by using gravity model of FDI. Firstly, we provide critical analysis of previous studies that performed research on determinants of FDI in LAC and the relation of the Ownership-Location-Internalisation Paradigm and the Investment Development Path within the Gravity Model of the FDI. We performed research on a sample of eight high-income, OECD member states and eight countries from LAC region. Econometric model was constructed and performed Pooled Ordinary Least Squares (POLS) regression, Fixed Effect and Random Effect regression. The impact of RERs differs with respect to the used panel data estimator.

Suggested Citation

  • Martin Kocúrek, 2017. "Effects Of Real Exchange Rate On Foreign Direct Investment By Using Gravity Model In Latin America And Caribbean," Almanach (Actual Issues in World Economics and Politics), Ekonomická univerzita, Fakulta medzinárodných vzťahov, vol. 12(4), pages 26-44.
    • Handle: RePEc:brv:almnch:v:10:y:2017:i:4:p:26-44
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    More about this item

    Keywords

    real exchange rates; bilateral FDI flow; gravity model; FDI; Latin America and Caribbean; non-stationary panel data;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • F10 - International Economics - - Trade - - - General
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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