Exchange rates and US direct investment into Latin America

Ruiz, Isabel; Pozo, Susan

doi:10.1080/09638190802137083

Cited by 10 publications

(5 citation statements)

References 53 publications

(55 reference statements)

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“…Greenaway et al (2012) on the other hand discovered that multinational enterprises whose origin was outside the European Union (EU) were the least affected by exchange rate volatility whilst the multinational enterprises from the EU region were found to be more susceptible to exchange rates changes. Moreover, Ruiz and Pozo (2008) found out that exchange rate volatility negatively impacted on FDI from the US into Latin American countries (Argentina, Brazil, Chile, Colombia, Mexico, Peru and Venezuela) during the period between 1994 and 2005. The same study by Ruiz and Pozo (2008) revealed that persistency in exchange rate volatility is the one that resulted negative FDI inflow from the US to the Latin American countries.…”

Section: Review Of Related Literaturementioning

confidence: 99%

“…Moreover, Ruiz and Pozo (2008) found out that exchange rate volatility negatively impacted on FDI from the US into Latin American countries (Argentina, Brazil, Chile, Colombia, Mexico, Peru and Venezuela) during the period between 1994 and 2005. The same study by Ruiz and Pozo (2008) revealed that persistency in exchange rate volatility is the one that resulted negative FDI inflow from the US to the Latin American countries.…”

Section: Review Of Related Literaturementioning

confidence: 99%

“…In other words, the hypothesis that there is no relationship between FDI and exchange rates falls away as informed by the literature. Ruiz and Pozo (2008) revealed that exchange rate volatility had a negative impact on FDI from the US into Latin American countries (Argentina, Brazil, Chile, Colombia, Mexico, Peru and Venezuela) during the period between 1994 and 2005. The persistency in exchange rate volatility is the one that resulted negative FDI inflow from the US to the Latin American countries, argued Ruiz and Pozo (2008).…”

Section: Introductionmentioning

confidence: 99%

“…Ruiz and Pozo (2008) revealed that exchange rate volatility had a negative impact on FDI from the US into Latin American countries (Argentina, Brazil, Chile, Colombia, Mexico, Peru and Venezuela) during the period between 1994 and 2005. The persistency in exchange rate volatility is the one that resulted negative FDI inflow from the US to the Latin American countries, argued Ruiz and Pozo (2008). According to Greenaway et al (2012), multinational enterprises whose origin was outside the European Union (EU) were the least affected by exchange rate volatility whilst the multinational enterprises from the EU region were found to be more susceptible to exchange rates changes.…”

Section: Introductionmentioning

confidence: 99%

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FDI location and exchange rates. is there really a relationship between the two?

Tsaurai¹

2015

COC

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The exchange rate led foreign direct investment (FDI), FDI led exchange rates and feedback effect hypotheses summarise the literature around the nature of the relationship between FDI and exchange rates. So many authors on this subject over a long period have been found to generally side with of the above-mentioned hypothesis or another without a consensus. Despite this lack of consensus with regard to the exact nature of the causal relation between these two variables, what is coming out clearly from the literature is that there indeed exist a relationship between FDI and exchange rates. The lack of consensus has prompted this current study that used the ARDL (Autoregressive distributed lag)-bounds testing approach. The study revealed the existence of causality from (1) the rand value to FDI in the long run and (2) FDI to the rand value only in the short run in South Africa. The author recommends that policies which strengthen the value of the rand should be put in place in order to attract FDI in the long run. The flow of FDI into South Africa will in turn not only stabilises the value of the rand.

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Section: Review Of Related Literaturementioning

confidence: 99%

Section: Review Of Related Literaturementioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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FDI location and exchange rates. is there really a relationship between the two?

Tsaurai¹

2015

COC

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“…14 14 Because of space issues we do not elaborate on the control variable results, but they may differ from previous work (see Montero 2008; Ruiz and Pozo 2008; Agostini and Raquel Jalile 2009; Tuman 2009) because of various differences, including lack of a proper judicial/rule of law indicator and/or difference in the years and countries used in the studies. …”

mentioning

confidence: 99%

Foreign Direct Investment in Latin America: The Importance of Judicial Strength and Rule of Law1

Staats¹,

Biglaiser²

2011

International Studies Quarterly

124

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An extensive literature has emerged recently that investigates the determinants of foreign direct investment (FDI) in developing regions of the world, including Latin America. Much of this work has focused on whether authoritarian or democratic rule is better for attracting FDI. Curiously, little attention has been devoted to unpacking regime type to see whether specific political institutional variables related to judicial strength and adherence to the rule of law are important FDI determinants. Based on panel data analysis and our own survey of US corporations, we find that judicial strength and rule of law elements are important determinants of FDI in Latin America.For years, scholars have remarked on the importance of quality courts and rule of law for attracting foreign direct investment (FDI)

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Exchange rate volatility and capital inflows: role of financial development

Jehan

Hamid

2017

Port Econ J

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There is vast literature examining the impact of exchange rate volatility on various macroeconomic aggregates such as economic growth, trade flows, domestic investment, and more recently capital flows. However, these studies have ignored the role of financial development while examining the impact of exchange rate volatility on capital flows. This study aims to analyze the impact of exchange rate volatility on capital inflows towards developing countries by incorporating the role of financial development over the time period 1980-2013. In this regard, the behavior of two types of capital flows is examined: physical capital inflows measured as foreign direct investment, and financial inflows quantified through remittance inflows. The empirical investigation comprises the direct as well as indirect effect of exchange rate volatility on capital inflows. The study employs dynamic system GMM estimation technique to empirically estimate the effect of exchange rate volatility on capital inflows. The empirical results of the study identify that exchange rate volatility dampens both physical and financial inflows towards developing countries. The indirect impact of exchange rate volatility through financial development, however, turns out positive and statistically significant. This finding reflects that financial development helps in reducing the harmful impact of exchange rate volatility on capital inflows. Hence, the study concludes that a developed financial system is an important channel through which developing countries may improve capital inflows in the long run. Keywords Capital inflows. Foreign direct investment. Remittances. Financial development. Exchange rate volatility JEL classification F310. F41. F24

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Exchange rates and US direct investment into Latin America

Cited by 10 publications

References 53 publications

FDI location and exchange rates. is there really a relationship between the two?

FDI location and exchange rates. is there really a relationship between the two?

Foreign Direct Investment in Latin America: The Importance of Judicial Strength and Rule of Law1

Exchange rate volatility and capital inflows: role of financial development

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