Abstract:
The study investigated the impacts of FDI inflow on the economic growth of Latin American
countries for the period 1995 to 2013 by using a panel data model. The countries peculiar
characteristics of domestic investment percent of GDP, openness of trade percent of GDP,
inflation, human capital, and government expenditure percent of GDP were used to achieve the
study objective. Results showed that the current economic growth in the selected Latin
American countries was positively affected by the FDI inflow. While findings showed a negative
relationship between human capitals and economic growth, they showed a significant
relationship between domestic investment and economic growth which suggested that FDI has
no crowding out effect on the current domestic investment. In the study attempt to add to the
existing knowledge on FDI-led growth, it initiated the research on exploring the seven largest
recipients of FDI inflows among Latin American countries. It also attempted to clarify the role
human capital endowment played in FDI attraction during the specified period.
