Macroeconomics, politics, and policy: The determinants of capital flows to Latin America

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Title: Macroeconomics, politics, and policy: The determinants of capital flows to Latin America
Author: Huggins, Caitlin Elizabeth
Abstract: Since the “lost decade” of the 1980’s Latin America has attracted several forms of capital from abroad . Extensive studies about the effects of capital have found mixed results about their effects , but that these emerging markets are constantly seeking out foreign monies . Despite unresolved debates over these effects , policy makers desire to understand the determinants of capital inflows—specifically foreign direct investment (FDI ) , portfolio investment (PI ) , and remittances . Although determinants of FDI have been extensively studied , portfolio investment and remittances , which make up a combined three -fourths of capital inflows for many of these nations , have been mostly ignored . In this study , I investigate the different factors and dynamics that determine these three different forms of capital inflow . I argue that the factors (macroeconomic , political , and domestic ) that help determine each of these types of capital inflows are different across inflow type . I find that PI remains the most unpredictable form of capital to the region , but that remittances and FDI demonstrate important similarities that policy makers should consider . My findings about remittances also have substantial implications for future research of migrants’ decision to remit as well as a states’ ability to stimulate these flows with implications for capital control policy .
URI: http : / /hdl .handle .net /2346 /18206
Date: 2007-08

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Macroeconomics, politics, and policy: The determinants of capital flows to Latin America. Master's thesis, Texas Tech University. Available electronically from http : / /hdl .handle .net /2346 /18206 .

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