Institutional determinants of outward foreign direct investment in Latin America

Samuel Garoni

Student thesis: Master thesis

Abstract

Outward FDI has become a topic that has received increased attention by scholars in recent years. Not only its effects on host countries but also its effects on home countries. This thesis looks at institutional determinants for outward FDI, asking how do institutional factors (such as capital market efficiency i.e.) influence outward foreign direct investment decisions in Latin American countries? Latin America was chosen, as it is an often-overlooked emerging market region. To address this topic a quantitative study was conducted, looking for a potential correlation between outward FDI and institutional variable such as capital market efficiency, product market efficiency or government efficiency. Furthermore, a comparison is made between investment flows destined to the entire world and investment flows destined only to the region. The Results indicate mixed effects for different countries, depending on their resource endowments, size and industry background, institutions seem to influence outward FDI differently. Surprisingly, some variables indicate a negative correlation between outward FDI and institutional variables as in the case of capital market efficiency. When comparing outward FDI flows towards the entire world and those only to the region no clear pattern was found that points to an increase of investments due to improved institutions within the region.

EducationsMSc in Business, Language and Culture, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2015
Number of pages109