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Abstract
This research paper shows the differences in correlations between the various types of country risks and inward foreign direct investment (FDI) flow using aggregate data from six Latin American countries as a proxy for the Region. The countries considered are Argentina, Brazil, Chile, Colombia, Mexico and Venezuela due to the size of their economy and the availability of sufficient data to run a series of multiple linear regressions. The main finding of this paper is that understanding the differences in the correlations between different types of country risks and inward FDI flows can serve as a proxy for determining the motivators of Multinational Enterprises (MNE) that seek to invest in a specific region or country. The resulting empirical results provide a simple and powerful decision tool for the allocation of limited FDI resources to countries or regions based on their risk profile.
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Abstract
This research paper shows the differences in correlations between the various types of country risks and inward foreign direct investment (FDI) flow using aggregate data from six Latin American countries as a proxy for the Region. The countries considered are Argentina, Brazil, Chile, Colombia, Mexico and Venezuela due to the size of their economy and the availability of sufficient data to run a series of multiple linear regressions. The main finding of this paper is that understanding the differences in the correlations between different types of country risks and inward FDI flows can serve as a proxy for determining the motivators of Multinational Enterprises (MNE) that seek to invest in a specific region or country. The resulting empirical results provide a simple and powerful decision tool for the allocation of limited FDI resources to countries or regions based on their risk profile.