The Political Economy of U.S. Foreign Direct Investment in Latin America: A Reappraisal

This study examines the political and economic determinants of U.S. foreign direct investment (FDI) in Latin America. The analysis focuses on fifteen Latin American and Caribbean countries for the period of 1979 to 1996. Market size, workers' skill levels, and political instability are found to have a statistically significant effect on the investment behavior of U.S. multinational firms. In addition, we find that a poor human rights record and military coups d'etat positively influenced U.S. FDI flows during the time series.