Does China have an impact on foreign direct investment to Latin America?

Serie: Documentos de Trabajo. 0517.

Autor: Alicia García-Herrero y Daniel Santabárbara.

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Does China have an impact on foreign direct investment to Latin America? (500 KB)

Resumen

We analyze empirically whether the emergence of China as a large recipient of FDI has affected the amount of FDI received by Latin American countries. For the longest time span possible given data availability (from 1984 to 2001), we do not find a substitution from Latin American inward FDI to China, when other relevant factors are taken into account. However, concentrating on the last few years (from 1995 to 2001), when FDI boomed worldwide and negotiations for China's WTO membership accelerated, the "Chinese" effect becomes highly significant. Assessing the impact country by country, China's inward FDI appears to have hampered that of Mexico and Colombia.