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Competition between Latin America and China for US direct investment

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  • De la Cruz Gallegos, Jose Luis
  • Ivanova Boncheva, Antonina
  • Ruiz-Porras, Antonio

Abstract

There is a belief that the Chinese economy competes with the Latin-American ones for investment flows. Here we analyze the determinants of the US FDI outflows to the most representative Latin-American economies. We develop such assessment with a double-procedure cointegration analysis based on the time-series methodologies of Toda and Yamamoto (1995) and Liu, Song and Romilly (1997). The results suggest that long-run investment to the Latin-American region mainly depends on the performance of the US economy. Furthermore, they suggest the existence of a substitution effect between the Latin American countries and China for US investment flows.

Suggested Citation

  • De la Cruz Gallegos, Jose Luis & Ivanova Boncheva, Antonina & Ruiz-Porras, Antonio, 2008. "Competition between Latin America and China for US direct investment," MPRA Paper 8950, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:8950
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    More about this item

    Keywords

    FDI; Latin America; China; US; Cointegration;
    All these keywords.

    JEL classification:

    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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