El papel de los mercados financieros en la relación inversión extranjera directa y crecimiento económico en América Latina

Abstract

This article examines the role of local financial markets in the relationship of foreign direct investment (FDI) and economic growth using a sample of 17 Latin American countries during the period 2002-2017. Based on the estimator of the system of the generalized method of moments (GMM), the results of the estimate reveals that FDI alone has a positive and significant effect on the growth of GDP per capita. However, when considering the interaction between FDI and financial development, the econometric analysis suggests that the latter does not represent an ability to absorb FDI at the aggregate level; while by differentiating this effect by income groups, it was found that only middlehigh and high-income countries benefit from this complementary effect. Therefore, it has concluded that financial development maximizes the benefits of FDI only in countries that have reached a certain level of economic development since, in them, financial systems are more developed and efficient