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- Title
Causality between Chinese investment in Latin America and the governance indicators.
- Authors
Montoya, Miguel A.; Bernal Ponce, L. Arturo; Pérez Navarro, Ricardo; Ramírez Grajeda, Mauricio
- Abstract
This article analyzes the causal relationship between China's outward foreign direct investment (FDI) and several governance indicators by performing a panel data analysis for Latin American countries. First, a long-term relationship was found between China's outward FDI and three governance indicator variables: control of corruption (CC), regulatory quality (QR), and government effectiveness (GE). This result supports the idea that there is a statistical relationship between FDI and the governance indicators. We also found evidence of causality from FDI to CC, implying that after Chinese investment there is a change in the host country's perception of corruption. In addition, causality from QR and GE to FDI was found. The result is evidence of how outward FDI effects the host country government's ability to implement policies and regulations which promote private investment and the quality of public services.
- Subjects
LATIN America; CHINA; FOREIGN investments; PUBLIC investments; PANEL analysis; QUALITY of service; INVESTMENTS
- Publication
Competition & Regulation in Network Industries, 2020, Vol 21, Issue 1, p6
- ISSN
1783-5917
- Publication type
Article
- DOI
10.1177/1783591719874774