U.S. foreign direct investment in Latin America and the Caribbean: a case of remittances and market size |
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| Authors: | Pablo A Garcia-Fuentes P Lynn Kennedy |
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| Institution: | 1. Department of Economics, Midwestern State University, Dillard College of Business Administration 215, Wichita Falls, TX, USA;2. Department of Agricultural Economics and Agribusiness, Louisiana State University, Baton Rouge, LA, USA |
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| Abstract: | This article investigates the effect of remittances on U.S. foreign direct investment (FDI) flows to Latin America and the Caribbean (LAC). It covers 26 countries for the period 1983–2010. The results show a positive and significant impact of remittances on U.S. FDI flows. However, this effect depends upon the level of gross domestic product (GDP) per capita of the host country. On average, the results show that increasing remittances by one standard deviation increases U.S. FDI flows by 0.44 percent a year. Also, host country demand positively affects U.S. FDI flows, which supports the market size hypothesis. |
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| Keywords: | Foreign direct investment remittances market size United States Latin America and the Caribbean |
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