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U.S. Foreign Direct Investment in Latin America and the Caribbean: A case of Remittances and Market Size


  • Garcia-Fuentes, Pablo A.
  • Kennedy, P. Lynn
  • Ferreira, Gustavo F.C.


This paper investigates the effect of remittances in attracting U.S. foreign direct investment flows to Latin America and the Caribbean (LAC). It uses an unbalanced panel data set for fifteen countries covering the period 1983-2010. The results suggest a positive and significant impact of remittances on U.S. FDI flows to LAC, but it depends upon the level of per capita GDP in the host country. Thus, a threshold of per capita GDP is needed for a country to benefit from the positive effect of remittances on U.S. FDI flows. Also, host country demand positively affects U.S. FDI flows to LAC, which supports the market size hypothesis.

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  • Garcia-Fuentes, Pablo A. & Kennedy, P. Lynn & Ferreira, Gustavo F.C., 2013. "U.S. Foreign Direct Investment in Latin America and the Caribbean: A case of Remittances and Market Size," 2013 Annual Meeting, February 2-5, 2013, Orlando, Florida 142985, Southern Agricultural Economics Association.
  • Handle: RePEc:ags:saea13:142985

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    More about this item


    Foreign direct investment; Remittances; Market size; United States; Latin America and the Caribbean; International Development; F21; F23; F24; O54;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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