the pattern of flows of direct foreign investment in the countries of Latin America (1991-2005)

Abstract

This paper discusses the pattern of flows of net foreign direct investment
for the long run (1991-2005) in 18 countries of the Latin American
Region and tests the hypothesis of positive relationship between the size
of gross domestic product and the flows of net FDI. Based on the analysis
of global trends and other factors, the ordinary linear regression of the
figures available for the long term period shows a high degree of correlation
between the size of the gross domestic product and the flows of net direct
investment by country. In the case of Colombia the long term performance
is better than expected –in spite of the political risk involved–, but the
failure in developing new areas for export-oriented foreign direct investment,
due the lack of good infrastructure, remains a major constraint for
growth based on investment projects that enhance economic efficiency
and competitiveness.