IDEAS home Printed from https://ideas.repec.org/a/eee/chieco/v18y2007i3p266-286.html
   My bibliography  Save this article

Does China have an impact on foreign direct investment to Latin America?

Author

Listed:
  • Garcia-Herrero, Alicia
  • Santabarbara, Daniel

Abstract

We analyze empirically whether the emergence of China as a large recipient of FDI has affected the amount of FDI received by Latin American countries. For the longest time span possible given data availability (from 1984 to 2001), we do not find a substitution from Latin American inward FDI to China, when other relevant factors are taken into account. However, concentrating on the last few years (from 1995 to 2001), when FDI boomed worldwide and negotiations for China's WTO membership accelerated, the "Chinese" effect becomes highly significant. Assessing the impact country by country, China's inward FDI appears to have hampered that of Mexico and Colombia.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Garcia-Herrero, Alicia & Santabarbara, Daniel, 2007. "Does China have an impact on foreign direct investment to Latin America?," China Economic Review, Elsevier, vol. 18(3), pages 266-286.
    • Handle: RePEc:eee:chieco:v:18:y:2007:i:3:p:266-286
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1043-951X(07)00013-2
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
    2. Levy Yeyati, Eduardo & Panizza, Ugo & Stein, Ernesto, 2007. "The cyclical nature of North-South FDI flows," Journal of International Money and Finance, Elsevier, vol. 26(1), pages 104-130, February.
    3. repec:idb:brikps:publication-detail,7101.html?id=24760 is not listed on IDEAS
    4. Eaton Jonathan & Tamura Akiko, 1994. "Bilateralism and Regionalism in Japanese and U.S. Trade and Direct Foreign Investment Patterns," Journal of the Japanese and International Economies, Elsevier, vol. 8(4), pages 478-510, December.
    5. Lane, Philip R. & Milesi-Ferretti, Gian Maria, 2004. "Financial globalization and exchange rates," LSE Research Online Documents on Economics 19926, London School of Economics and Political Science, LSE Library.
    6. Stephen R. Bond, 2002. "Dynamic panel data models: a guide to micro data methods and practice," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 1(2), pages 141-162, August.
    7. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    8. Fung, K. C. & Iizaka, Hitomi & Parker, Stephen, 2002. "Determinants of U.S. and Japanese Direct Investment in China," Journal of Comparative Economics, Elsevier, vol. 30(3), pages 567-578, September.
    9. James Love & Francisco Lage-Hidalgo, 2000. "Analysing the determinants of US direct investment in Mexico," Applied Economics, Taylor & Francis Journals, vol. 32(10), pages 1259-1267.
    10. Ms. Florence Jaumotte, 2004. "Foreign Direct Investment and Regional Trade Agreements: The Market Size Effect Revisited," IMF Working Papers 2004/206, International Monetary Fund.
    11. Albuquerque, Rui & Loayza, Norman & Serven, Luis, 2005. "World market integration through the lens of foreign direct investors," Journal of International Economics, Elsevier, vol. 66(2), pages 267-295, July.
    12. Hausmann, Ricardo & Fernández-Arias, Eduardo, 2000. "Foreign Direct Investment: Good Cholesterol?," IDB Publications (Working Papers) 1319, Inter-American Development Bank.
    13. James R. Hines, Jr., 1995. "Forbidden Payment: Foreign Bribery and American Business After 1977," NBER Working Papers 5266, National Bureau of Economic Research, Inc.
    14. Alicia García-Herrero & Juan M. Ruiz, 2008. "Do trade and financial linkages foster business cycle synchronization in a small economy?," Working Papers 0810, Banco de España.
    15. Lane, Philip R. & Milesi-Ferretti, Gian Maria, 2004. "Financial globalization and exchange rates," LSE Research Online Documents on Economics 19926, London School of Economics and Political Science, LSE Library.
    16. Stephen Bond, 2002. "Dynamic panel data models: a guide to microdata methods and practice," CeMMAP working papers CWP09/02, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
    17. Brainard, S Lael, 1997. "An Empirical Assessment of the Proximity-Concentration Trade-off between Multinational Sales and Trade," American Economic Review, American Economic Association, vol. 87(4), pages 520-544, September.
    18. Shang-Jin Wei, 1997. "Why is Corruption So Much More Taxing Than Tax? Arbitrariness Kills," NBER Working Papers 6255, National Bureau of Economic Research, Inc.
    19. Javier Díaz-Cassou & Alicia García-Herrero & Luis Molina, 2006. "What kind of capital flows does the IMF catalyze and when?," Working Papers 0617, Banco de España.
    20. Singh, Harinder & Kwang W. Jun, 1995. "Some new evidence on determinants of foreign direct investment in developing countries," Policy Research Working Paper Series 1531, The World Bank.
    21. Ricardo Hausmann & Eduardo Fernández-Arias, 2000. "Foreign Direct Investment: Good Cholesterol?," Research Department Publications 4203, Inter-American Development Bank, Research Department.
    22. Lucas, Robert E. B., 1993. "On the determinants of direct foreign investment: Evidence from East and Southeast Asia," World Development, Elsevier, vol. 21(3), pages 391-406, March.
    23. Julia Campos & Neil R. Ericsson & David F. Hendry, 2005. "General-to-specific modeling: an overview and selected bibliography," International Finance Discussion Papers 838, Board of Governors of the Federal Reserve System (U.S.).
    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. Eduardo Lora, 2005. "Debe América Latina temerle a la China?," Research Department Publications 4410, Inter-American Development Bank, Research Department.
    2. Evgeny Vinokurov, 2014. "Emerging Eurasian Continental Integration," Global Journal of Emerging Market Economies, Emerging Markets Forum, vol. 6(1), pages 69-93, January.
    3. Robert A Buckle & Amy A Cruickshank, 2007. "The Challenge of Structural Change in APEC Economies," Treasury Working Paper Series 07/06, New Zealand Treasury.
    4. Vinokurov, Evgeny, 2014. "Emerging Eurasian Continental Integration: Trade, Investment and Infrastructure," MPRA Paper 62027, University Library of Munich, Germany.
    5. Yuqing Xing, 2008. "FDI in China: Facts and Impacts on China and the World Economy," Working Papers EMS_2008_03, Research Institute, International University of Japan.
    6. Roberto Porzecanski & Kevin P. Gallagher, 2007. "Economic reform and foreign direct investment in Latin America," Progress in Development Studies, , vol. 7(3), pages 217-233, July.
    7. Lora, Eduardo, 2005. "Should Latin America Fear China?," IDB Publications (Working Papers) 4367, Inter-American Development Bank.
    8. Aleksynska, Mariya & Havrylchyk, Olena, 2013. "FDI from the south: The role of institutional distance and natural resources," European Journal of Political Economy, Elsevier, vol. 29(C), pages 38-53.
    9. Bassem Kahouli & Anis Omri & Anissa Chaibi, 2014. "Environmental Regulations, Trade, and Foreign Direct Investment: Evidence from Gravity Equations," Working Papers 2014-189, Department of Research, Ipag Business School.
    10. Avendano, Rolando & Alonso Arroba, Angel & Estrada, Arturo, 2009. "Adapting to the Rise of China: How can Latin American Companies Succeed?," MPRA Paper 25948, University Library of Munich, Germany.
    11. Kahouli, Bassem & Omri, Anis, 2017. "Foreign direct investment, foreign trade and environment: New evidence from simultaneous-equation system of gravity models," Research in International Business and Finance, Elsevier, vol. 42(C), pages 353-364.
    12. Luis J. Álvarez & Emmanuel Dhyne & Marco Hoeberichts & Claudia Kwapil & Hervé Le Bihan & Patrick Lünnemann & Fernando Martins & Roberto Sabbatini & Harald Stahl & Philip Vermeulen & Jouko Vilmunen, 2006. "Sticky Prices in the Euro Area: A Summary of New Micro-Evidence," Journal of the European Economic Association, MIT Press, vol. 4(2-3), pages 575-584, 04-05.
    13. Jean Paul Rabanal & Olga A. Rabanal, 2015. "The effects of Chinese competition and demand on Peruvian Exporters," Working Papers 30, Peruvian Economic Association.
    14. Lu Ming & Zhao Chen & Yongqin Wang & Yan Zhang & Yuan Zhang & Changyuan Luo, 2013. "China’s Economic Development," Books, Edward Elgar Publishing, number 14502.
    15. Kahouli, Bassem & Maktouf, Samir, 2015. "The determinants of FDI and the impact of the economic crisis on the implementation of RTAs: A static and dynamic gravity model," International Business Review, Elsevier, vol. 24(3), pages 518-529.
    16. Alex E. Fernández Jilberto & Barbara Hogenboom, 2007. "Latin America and China Under Global Neoliberalism," Journal of Developing Societies, , vol. 23(4), pages 467-501, October.
    17. De la Cruz Gallegos Jose Luis & Ivanova Boncheva Antonina & Ruiz-Porras Antonio, 2008. "Competition between Latin America and China for US Direct Investment," Global Economy Journal, De Gruyter, vol. 8(2), pages 1-22, June.
    18. Kevin Williams, 2015. "Foreign direct investment in Latin America and the Caribbean: an empirical analysis," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 52(1), pages 57-77, May.
    19. Hung, Chih-Young & Chiang, Yi-Hui, 2009. "Does an upper limit on foreign direct investment matter?: The case of Taiwan," Journal of Asian Economics, Elsevier, vol. 20(5), pages 549-560, September.

    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. Carlos Andrés Amaya & Peter Rowland, 2004. "Determinants of Investment Flows into Emerging Markets," Borradores de Economia 313, Banco de la Republica de Colombia.
    2. Fung, K.C. & Korhonen, Iikka & Li, Ke & Ng, Francis, 2008. "China and Central and Eastern European countries: regional networks, global supply chain or international competitors?," BOFIT Discussion Papers 9/2008, Bank of Finland Institute for Emerging Economies (BOFIT).
    3. Carlos Andrés Amaya G. & Peter Rowland, 2004. "Determinants Of Investment Flows Into Emerging Markets," Borradores de Economia 2334, Banco de la Republica.
    4. Sèna Kimm Gnangnon, 2020. "Trade Openness and Diversification of External Financial Flows for Development: An Empirical Analysis," South Asian Journal of Macroeconomics and Public Finance, , vol. 9(1), pages 22-57, June.
    5. Gnangnon, Sèna Kimm, 2023. "Duration of membership in the world trade organization and investment-oriented remittances inflows," The Quarterly Review of Economics and Finance, Elsevier, vol. 88(C), pages 258-277.
    6. Gnangnon, Sèna Kimm, 2022. "Duration of WTO Membership and Investment-Oriented Remittances Flows," EconStor Preprints 251274, ZBW - Leibniz Information Centre for Economics.
    7. Sèna Kimm Gnangnon, 2023. "Do unilateral trade preferences help reduce poverty in beneficiary countries?," International Journal of Economic Policy Studies, Springer, vol. 17(1), pages 249-288, February.
    8. Gnangnon, Sèna Kimm, 2021. "Effect of the Utilization of Non-Reciprocal Trade Preferences offered by the QUAD on Economic Growth in Beneficiary Countries," EconStor Preprints 242848, ZBW - Leibniz Information Centre for Economics.
    9. Fung , K.C. & Korhonen, Iikka & Li, Ke & Ng, Francis, 2008. "China and central and eastern European countries : regional networks, global supply chain, or international competitors?," Policy Research Working Paper Series 4689, The World Bank.
    10. repec:zbw:bofitp:2008_009 is not listed on IDEAS
    11. Robert Reed & Christina Lira & Lee Byung‐Ki & Junsoo Lee, 2016. "Free Trade Agreements and Foreign Direct Investment: The Role of Endogeneity and Dynamics," Southern Economic Journal, John Wiley & Sons, vol. 83(1), pages 176-201, July.
    12. Gnangnon, Sèna Kimm, 2021. "Do Unilateral Trade Preferences Help Reduce Poverty in Beneficiary Countries?," EconStor Preprints 247346, ZBW - Leibniz Information Centre for Economics.
    13. Huy Quang Doan, 2019. "Trade, Institutional Quality and Income: Empirical Evidence for Sub-Saharan Africa," Economies, MDPI, vol. 7(2), pages 1-23, May.
    14. Kampelmann, Stephan & Rycx, François, 2012. "The impact of educational mismatch on firm productivity: Evidence from linked panel data," Economics of Education Review, Elsevier, vol. 31(6), pages 918-931.
    15. Falavigna, Greta & Ippoliti, Roberto, 2023. "SMEs’ behavior under financial constraints: An empirical investigation on the legal environment and the substitution effect with tax arrears," The North American Journal of Economics and Finance, Elsevier, vol. 66(C).
    16. Charles Yuji Horioka & Junmin Wan, 2007. "The Determinants of Household Saving in China: A Dynamic Panel Analysis of Provincial Data," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 39(8), pages 2077-2096, December.
    17. Demir, Firat, 2010. "Exchange Rate Volatility and Employment Growth in Developing Countries: Evidence from Turkey," World Development, Elsevier, vol. 38(8), pages 1127-1140, August.
    18. Meschi, Elena & Taymaz, Erol & Vivarelli, Marco, 2011. "Trade, technology and skills: Evidence from Turkish microdata," Labour Economics, Elsevier, vol. 18(S1), pages 60-70.
    19. Zhou, Xiaoyan & Zhang, Jie & Li, Junpeng, 2013. "Industrial structural transformation and carbon dioxide emissions in China," Energy Policy, Elsevier, vol. 57(C), pages 43-51.
    20. Noy, Ilan & Vu, Tam Bang, 2010. "The economics of natural disasters in a developing country: The case of Vietnam," Journal of Asian Economics, Elsevier, vol. 21(4), pages 345-354, August.
    21. Isis Gaddis & Stephan Klasen, 2014. "Economic development, structural change, and women’s labor force participation:," Journal of Population Economics, Springer;European Society for Population Economics, vol. 27(3), pages 639-681, July.

    More about this item

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F3 - International Economics - - International Finance

    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:eee:chieco:v:18:y:2007:i:3:p:266-286. 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: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/chieco .

    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.