An Empirical Investigation of U.S. FDI in Latin America (Foreign Direct Investment‪)‬

ABSTRACT Due to the many changes since the late eighties in terms of financial liberation, privatization, trade agreements and other policy changes (both national and international) have a significant influence on the changes that occur in the business environment in Latin America, providing incentives for investment decisions, not only for companies already operating in the region, but for new entrants as well. Currently, foreign direct investment (FDI) flows are the outcome of a combination of factors, including the international environment, national policies, and corporate strategies. Thus, this study evaluates the volume of FDI inflows into the region; the factors that attract them, including incentives and regulations; and their contribution, economical and societal, to Latin American development. This research also explores some of the potential costs of FDI, and its implications on policy options. Using an econometric model, this study evaluates the determinants of FDI into this region and base of the results draws some general conclusions.