Foreign Direct Investment and human development: the case of Latin America (1990-2021)
Ricardo Apolinar
Pavel Vidal
Víctor Giménez
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Abstract
The main objective of this research was to analyze the relationship between foreign direct investment and human development in Latin America, from 1990 to 2021, using the estimation of panel vector autoregression (PVAR) and panel vector error correction (PVEC), first with 18 countries and then with 10 economies with a high participation of themining-energy sector. The estimation considered the variables Human Development Index (HDI) and Foreign Direct Investment (FDI), while exports and the Terms of Trade Index (TTI) were employed as control variables. The results showed that FDI positively affected human development in Latin America, with a stronger effect when mining-energy economies were considered, which could be explained by technology transfer, job creation, and the improvement of workforce skills in the host economies of investment flows. However, one limitation of panel models is that they generalize the particularities of each economy, making it necessary to further examine the characteristics of each country.
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