DT 11/22 - Inversión extranjera directa y calidad del gobierno: Evidencia para los países de América Latina y la OECD

This paper empirically studies the impact of economic, demographic, and institutional factors on foreign direct investment (FDI) in a sample of 46 developed and developing economies in the period 1996-2018. In particular, we examine to what extent quality of government impacts foreign investment inflows in 33 OECD countries and 13 Latin American countries. Applying panel data methods, we found that institutional quality positively affects FDI in both groups of countries. These findings are robust to different model specifications and estimation methods. From this study, it is possible to conclude that, it is essential the design of public policies which contribute to strengthening institutional quality, particularly in those economies with weaker institutions.