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

Author Info

  • Alicia García-Herrero

    ()

    (Banco de España)

  • Daniel Santabárbara

    ()

    (Banco de España)

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.

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File URL: http://www.bde.es/f/webbde/SES/Secciones/Publicaciones/PublicacionesSeriadas/DocumentosTrabajo/05/Fic/dt0517e.pdf
File Function: First version, August 2005
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Paper provided by Banco de España & Working Papers Homepage in its series Working Papers with number 0517.

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Length: 25 pages
Date of creation: Aug 2005
Date of revision:
Handle: RePEc:bde:wpaper:0517
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Keywords: china; latin america; fdi;

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Find related papers by JEL classification:
  • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
  • F3 - International Economics - - International Finance

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  1. Eduardo Levy Yeyati & Ugo Panizza & Ernesto H. Stein, 2003. "The Cyclical Nature of North-South FDI Flows," IDB Publications (Working Papers) 6502, Inter-American Development Bank.
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  8. Ricardo Hausmann & Eduardo Fernández-Arias, 2000. "Foreign Direct Investment: Good Cholesterol?," IDB Publications (Working Papers) 6466, Inter-American Development Bank.
  9. James R. Hines, Jr., 1995. "Forbidden Payment: Foreign Bribery and American Business After 1977," NBER Working Papers 5266, National Bureau of Economic Research, Inc.
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  12. 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.
  13. 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.
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Cited by:

  1. 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.
  2. 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.
  3. Eduardo Lora, 2005. "Should Latin America Fear China?," Research Department Publications 4419, Inter-American Development Bank, Research Department.
  4. 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.
  5. Luis J. Álvarez & Emmanuel Dhyne & Marco M. Hoeberichts & Claudia Kwapil & Hervé le Bihan & Patrick Lünnemann & Fernando Martins & Roberto Sabbatini & Harald Stahl & Philip Vermeulen & Jouko Vilmunen, 2005. "Sticky prices in the euro area: a summary of new micro evidence," Working Papers 0542, Banco de España;Working Papers Homepage.
  6. 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.
  7. 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.
  8. Robert A Buckle & Amy A Cruickshank, 2007. "The Challenge of Structural Change in APEC Economies," Treasury Working Paper Series 07/06, New Zealand Treasury.
  9. 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.
  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. Eduardo Lora, 2005. "¿Debe América Latina temerle a la China?," Research Department Publications 4420, Inter-American Development Bank, Research Department.
  12. Vinokurov, Evgeny, 2014. "Emerging Eurasian Continental Integration: Trade, Investment and Infrastructure," MPRA Paper 62027, University Library of Munich, Germany.
  13. 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.

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