Foreign Direct Investment and Structural Reforms: Evidence from Eastern Europe and Latin America (EPub)

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International Monetary Fund, Jan 1, 2008 - Business & Economics - 107 pages
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This paper investigates the role of structural reforms -financial reforms, trade liberalization, and privatization- as determinants of FDI inflows based on newly constructed dataset on structural reforms for 19 Latin American and 25 Eastern European countries between 1989 and 2004. Our main finding is a strong empirical relationship from reforms to FDI, in particular, from financial liberalization and privatization. These results are robust to different measures of reforms, split samples, and potential endogeneity and omitted variables biases.

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FDI in transition economies and Latin America
FDI Structural Reforms
Overall Financial Reform Index
Privatization Index
The Results

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