Human capital and institutions on Latin American FDI (1970-2014)

The following thesis belongs to the literature of FDI determinants on developing countries and its main contribution is its distinction between societies that are redistributive (in the sense that they spend bigger proportions of GDP in Social Protection) and those that aren't. For this purpose, the present paper gathers information about FDI inflows and many possible determinants, among which, we will care about Human Capital and Institutional Quality, for 17 Latin and Central American countries (not including islands) between 1970 and 2014. After that, a static linear econometric model is estimated using panel data techniques and results show that both variables of interest affect FDI inflows in a positive way and that their marginal effect is bigger in those societies spending more in Social Protection. Such a positive impact is confirmed after using a dynamic model, but not the incremental effect of spending more in Social Protection.