Exports, Foreign Direct Investment and Economic Growth: Evidence from Latin America

• Main Authors: Guillermo Daniel Alvarez Valadez, 丹尼爾
• Other Authors: Wang, Yung-Chang
• Format: Others
• Language: en_US
• Published: 2015
• Online Access: http://ndltd.ncl.edu.tw/handle/2hgeux

碩士 === 中國文化大學 === 國際企業管理學系 === 103 === ABSTRACT Latin America has suffered many ups and downs related to the macroeconomic performance in all of the countries that belong to this region. In recent years, the five countries under study, which are, Brazil, Chile, Colombia, Mexico, and Peru, have shown a stable and strong economy which allowed them to keep a steady growth, receiving large foreign direct investment and promoting the trade with other countries or regions all around the world through new FTAs. The total annual value of the commodities traded combined of the five economies is more than USD$ 1.6 Trillions , in which Brazil and Mexico represent the biggest share of this amount. Though there are many factors that may affect the economic growth in these countries such as corruption, education, natural disasters, holding an international sport event (Olympics, world cups, etc.) and insecurity, this study aims to explore and analyze, other things being equal, the casual relationships among GDP, Export and FDI in the five countries by using panel unit root tests and panel data regression. The data are collected from World Bank and Inter American Development Bank at the annual interval spanning from 1990 to 2012. Evidence from panel unit root tests shows that all the three variables are nonstationary with one unit root. Hence, they become stationary after taking first difference. Evidence from panel data regression with fixed effects suggests that FDI and export had positive significant influences on economic growth, as is found for Turkey by Cambazoglu and Karaalp (2014) and for Eastern Europe by Weber (2011). It is noted that nonlinear relationship existed between export and economic growth based on the negative significant coefficient of squared export. The FDI inflows were significantly determined by economic growth and by export through its interaction with economic growth as are found for Madagassar and Malawa by Tekin (2012) and for Pakistan by Shahzad et. al (2013). Economic growth and FDI inflows were the significant determinants of export as was found for Indonesia by Rahmaddi and Ichihashi (2013). The positive significant coefficient of squared FDI inflows suggests a nonlinear association of FDI inflows with export. However, the negative significant coefficient of the interaction between economic growth and FDI inflows serves as a moderating factor in determining export. It is expected the analysis done in this study will provide new reference and information about the relationships among export, foreign direct investment and economic growth for the five Latin American countries. Promotion of export and FDI inflows drives economic growth for the developing countries in Latin America. Keywords: FDI, export, economic growth, panel data, Latin America