The FDI and regional development in Chile
This is a comprehensive study of regional Foreign Direct Investment in Chile and its relationship with the development of Chilean regions. Following a process of steady foreign capitals flows to Chile, the link of this phenomenon with the growth of Chilean Regions are explored in three main chapters. The first part explores the main determinants in attracting FDI using a set of variables in a panel data econometric regression, finding that the most commonly used variables are determinants in attracting FDI in Chile depending on the type of investment and the sector in which this investment takes place, the investment in primary sectors in Chile are highly localized in regions characterized by having large quantities of natural resources and the significant variables are macroeconomic variables such as growth of GDP, unemployment rate, level of exports and public expenditure, whereas the investment in the services sector is concentrated in metropolitan regions where there were not significant variables from the set studied, only public investment and public expenditure (these variables were separated because they are channeled differently from the government). The second part will also use an econometric technique (panel data regression) to survey the bi-directional causality between FDI and GDP at regional level in Chile, the Granger tests performed in this chapter have an inconclusive outcome in determining bi-directional causality or uni-directional causality and its direction, but it can be inferred that it was the lack of enough time series to test further lags of causality. The third part will take a different approach on this relationship looking for the direct effect of FDI and domestic investment in the community, where large multinational firms are located in conjunction with a state-owned company in the same sector for a specific region of Chile, using an exploratory analysis, secondary data and the Corporate Social Responsibility (CSR) framework, the results showed that first, the direct contributions of these companies must have to be known in order to increase the positive perceptions of the community about the company, second, the community will respond positively towards these firms when they show interest in development of the region, third, there is a mutual benefit for the company, (state or foreign owned) and the community as a result of these contributions and fourth, for policy makers, it is important to encourage the responses from local companies, foreign companies and the community, that are product of policies towards CSR, because this can lead towards growth in the region and a source of profitability for multinationals and also the domestic firms.
Foreign Direct Investment (FDI), Regional Development, Developing countries and FDI, Panel data research in Chile, Foreign RSE and community development in Chile
University of Illinois - Urbana-Champaign
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University of Illinois at Urbana-Champaign