"Foreign Direct Investment and economic growth in Latin America: A panel data anaylsis", (together with Marta Bengoa), Workshop on Economic Freedom, University of Groningen, November 15-16, 2001

This paper intends to explore the impact of Foreign Direct Investment on economic growth in the Latin-American area. A dynamic panel data estimation by Two Stage GMM is performed on a sample of 18 countries belonging to this region over the period 1972-1997. Basic results suggest that Foreign Direct Investment is positively correlated with economic growth in the host countries of the sample considered. We attribute this empirical regularity to the idea that foreign investment may help the host country to acquire more advanced technology. However, the empirical analysis also points out to the need of a certain level of human capital, economic stability and liberalized markets in the host country in order for it to be able to benefit from the entrance of long term capital flows.