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

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  • Alicia Garcia-Herrero

    (Bank of Spain)

  • Daniel Santabarbara

    (Bank of Spain)

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.

Suggested Citation

  • Alicia Garcia-Herrero & Daniel Santabarbara, 2005. "Does China have an impact on foreign direct investment to Latin America?," International Finance 0508010, EconWPA.
  • Handle: RePEc:wpa:wuwpif:0508010
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    Citations

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    Cited by:

    1. Eduardo Lora, 2005. "Debe América Latina temerle a la China?," Research Department Publications 4410, Inter-American Development Bank, Research Department.
    2. Robert A Buckle & Amy A Cruickshank, 2007. "The Challenge of Structural Change in APEC Economies," Treasury Working Paper Series 07/06, New Zealand Treasury.
    3. Vinokurov, Evgeny, 2014. "Emerging Eurasian Continental Integration: Trade, Investment and Infrastructure," MPRA Paper 62027, University Library of Munich, Germany.
    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. Eduardo Lora, 2005. "Should Latin America Fear China?," IDB Publications (Working Papers) 4367, Inter-American Development Bank.
    6. 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.
    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. 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.
    9. 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.
    10. repec:eee:riibaf:v:42:y:2017:i:c:p:353-364 is not listed on IDEAS
    11. Jean Paul Rabanal & Olga A. Rabanal, 2015. "The effects of Chinese competition and demand on Peruvian Exporters," Working Papers 2015-30, Peruvian Economic Association.
    12. Lu Ming & Zhao Chen & Yongqin Wang & Yan Zhang & Yuan Zhang & Changyuan Luo, 2013. "China’s Economic Development," Books, Edward Elgar Publishing, number 14502.
    13. 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.
    14. 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.
    15. 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.
    16. 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.

    More about this item

    Keywords

    China; Latin America; FDI;

    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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