Foreign Direct Investment and Its Politics in Latin America

2019 ◽  
Author(s):  
R. Douglas Hecock
Keyword(s):  
Foreign Direct Investment ◽  
Latin America ◽  
Latin American ◽  
Comparative Politics ◽  
Direct Investment ◽  
International Political Economy ◽  
Debt Crisis ◽  
National Development ◽  
The Political ◽  
Latin American Countries

The open economic policies Latin American countries adopted in the wake of the debt crisis of the early 1980s were expected to bring a variety of benefits. Trade liberalization and privatization make domestic firms more competitive, and deregulation helps to create an efficient business climate. Notably, such policies are also likely to spur foreign investment seeking new opportunities, and Latin American countries did indeed begin to see large inflows in the 1990s. Foreign direct investment (FDI) is thought to be particularly complementary to economic development. Compared to portfolio investment in stocks and bonds, FDI consists of the construction or purchasing of physical assets including manufacturing facilities, retail outlets, hotels, and mines. FDI should spur local economic activity and bring with it jobs and technology transfers. Furthermore, because divestment takes planning and time, direct investment is relatively long-term, so investors are expected to display greater commitments to the economic and political futures of their hosts. As a result of these substantial potential benefits, a body of scholarship has emerged to try to understand the political dynamics of FDI. Is investment more likely to flow to democratic or authoritarian regimes? Are direct investors seeking countries with few labor protections and weak environmental regulations or are they attracted to public investments in human capital? Do they eschew governments with poor human rights records or do they see abusers as potential partners in managing a compliant workforce? What are the effects of FDI flows on the political contexts of their hosts? Among others, these questions have received significant scholarly attention, and while we have learned a great deal about the behavior and effects of FDI, considerable potential remains. Having received massive inflows averaging more than $100 billion between 2000 and 2017 and consisting of countries with broadly similar development trajectories, Latin America offers a rich landscape for such analysis. In particular, finer-grained examinations of FDI to Latin American countries can help us understand how it might affect political systems and which types of investment best complement national development projects. In so doing, studies of FDI flows to Latin America are poised to make major contributions to the fields of international political economy, development studies, and comparative politics.

A Different Kind of Investor?

2014 ◽  
pp. 417-433
Author(s):  
Gayle Allard
Keyword(s):  
Foreign Direct Investment ◽  
Latin America ◽  
Latin American ◽  
21St Century ◽  
Direct Investment ◽  
Regional Economies ◽  
Resource Intensity ◽  
Chinese Foreign Direct Investment ◽  
Latin American Countries

After decades of limited contact, China's influence in Latin America has soared in the early part of the 21st century. China's presence in Latin America holds potential for transforming regional economies in positive and negative ways. This chapter describes Chinese Foreign Direct Investment (FDI) in Latin America, explores its implications, and tests whether Chinese FDI differs from global FDI in Latin America regarding corruption and resource intensity. It finds that Chinese FDI is more closely associated with countries that are more resource-abundant and are ranked as more corrupt. This could have negative implications for Latin American countries and their development as China expands.

scholarly journals Do Trade and Investment Agreements Promote Foreign Direct Investment within Latin America? Evidence from a Structural Gravity Model

Mathematics ◽  
2020 ◽  
Vol 8 (11) ◽  
pp. 1882
Author(s):  
Marta Bengoa ◽  
Blanca Sanchez-Robles ◽  
Yochanan Shachmurove
Keyword(s):  
Foreign Direct Investment ◽  
Latin America ◽  
Gravity Model ◽  
Latin American ◽  
Low Income ◽  
Direct Investment ◽  
Trade Agreement ◽  
Low Income Countries ◽  
Regional Trade ◽  
Investment Protection

Latin America has experienced a surge in foreign direct investment (FDI) in the last two decades, in parallel with the ratification of major regional trade agreements (RTAs) and bilateral investment treaties (BITs). This paper uses the latest developments in the structural gravity model theory to study if the co-existence of BITs and two major regional agreements, Mercosur and the Latin American Integration Association (ALADI), exerts enhancing or overlapping effects on FDI for eleven countries in Latin America over the period 1995–2018. The study is novel as it accounts for variations in the degree of investment protection across BITs within Latin America by computing a quality index of BITs. It also explores the nature of interactions (enhancing/overlapping effects) between RTAs and BITs. The findings reveal that belonging to a well-established regional trade agreement, such as Mercosur, is significantly more effective than BITs in fostering intra-regional FDI. Phasing-in effects are large and significant and there is evidence of enhancing effects. Results within the bloc are heterogeneous: BITs exert a positive, but small effect, for middle income countries. However, BITs are not effective in attracting FDI in the case of middle to low income countries, unless these countries ratify BITs with a high degree of investment protection.

scholarly journals Political Institutions and Street Protests in Latin America

2011 ◽  
Vol 55 (3) ◽  
pp. 340-365 ◽  
Author(s):  
Fabiana Machado ◽  
Carlos Scartascini ◽  
Mariano Tommasi
Keyword(s):  
Latin America ◽  
Latin American ◽  
Political Institutions ◽  
Political Process ◽  
The Political ◽  
Individual Level ◽  
Country Level ◽  
Level Information ◽  
Alternative Means ◽  
Latin American Countries

In this article, the authors argue that where institutions are strong, actors are more likely to participate in the political process through institutionalized arenas, while where they are weak, protests and other unconventional means of participation become more appealing. The authors explore this relationship empirically by combining country-level measures of institutional strength with individual-level information on protest participation in seventeen Latin American countries. The authors find evidence that weaker political institutions are associated with a higher propensity to use alternative means for expressing preferences, that is, to protest.

scholarly journals Dollars for Pesos? The Political-Economy of Dollarization in Latin America

2001 ◽  
Vol 21 (1) ◽  
pp. 65-81
Author(s):  
PAMELA K. STARR
Keyword(s):  
Political Economy ◽  
Latin America ◽  
Latin American ◽  
Policy Choice ◽  
The Political ◽  
Economic Factors ◽  
Policy Debate ◽  
The Subject ◽  
Stable Growth ◽  
Latin American Countries

ABSTRACT The capacity of dollarization to generate stable growth in Latin America despite occasional instability in the international financial system has been the subject of significant economic analysis in recent years. Yet very little attention has been afforded to the politics of the issue. This paper attempts to fill this void by looking at both the political and the economic factors which influence the policy effectiveness of dollarization. The paper reviews the theoretic and policy debate within which the dollarization question is situated and then develops an informal model of the political and economic variables which influence the viability of dollarization. It concludes that although dollarization may be the correct policy choice for some Latin American countries, it is unlikely to benefit the majority. Most Latin American countries would benefit more from directly addressing the forces know to promote economic instability.

Do Remittances Attract Foreign Direct Investment? An Empirical Investigation

2014 ◽  
Vol 14 (1) ◽  
pp. 1-9 ◽  
Author(s):  
Hem C. Basnet ◽  
Kamal P. Upadhyaya
Keyword(s):  
Foreign Direct Investment ◽  
Latin American ◽  
Direct Investment ◽  
Asia Pacific ◽  
African Countries ◽  
Middle Income ◽  
Middle Income Countries ◽  
Negative Effect ◽  
Using Data ◽  
Latin American Countries

Remittances are a major source of household income in many Asian, African, and Latin American countries. Households spend a significant portion of remittances on health and education. Given that human capital is one of the primary determinants of foreign direct investment (FDI) inflow, this study develops a model in which remittances are one of several determinants of the observed variation in FDI. The model is estimated using data from a group of 35 middle-income countries from Latin America, Asia–Pacific, and Africa. The estimated results ascribe no significance to remittances in explaining cross-country variation in FDI. However, geographically-disaggregated estimated results do establish a positive effect for African countries, no significant effect for Latin American countries, and a negative effect for the Asia–Pacific region.

The Political Sociology of 21st-Century Populism in Latin America: A Critique of the Ecuadorian Case

2021 ◽  
pp. 089692052110322
Author(s):  
Jorge Daniel Vásquez
Keyword(s):  
Latin America ◽  
Latin American ◽  
21St Century ◽  
Critical Analysis ◽  
The Political ◽  
Political Dynamics ◽  
Historical Processes ◽  
Historical Contextualization ◽  
Latin American Countries ◽  
Universal Application

This paper calls into question the universal application of the concept of populism. It points to how particular historical processes need to be taken into account when addressing the formation of populism in Latin American countries. Unlike more theorized cases as Argentinian or Mexican populism, I use the Ecuadorian case to show how critical historical contextualization of 21st-century populism requires analyzing the continuities and ruptures with sociological knowledge about a particular populism. Such an analysis of continuities and ruptures shows the theoretical convergences among Latin America as a region and the political dynamics of specific historical processes. I highlight how the conceptions of 21st-century Ecuadorian populism as a “passive revolution” or “authoritarian disfigurement of democracy” provide some theoretical tools for examining the historical process of Ecuadorian populism but ultimately fall short of critical analysis. In conclusion, I derived from the Ecuadorian case some elements for the analysis of Latin American populist projects.

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