Determinants of FDI in the Chilean Case: A FMOLS Analysis, 1970-2016

This paper examines some of the major economic and institutional determinants foreign direct investment (FDI) flows to Chile during 2000s. It reports econometric results which suggest that standard variables changes in institutional-legal status capital are, large measure, responsible for rapid increase FDI leading sectors Chilean economy. Cointegration analysis presence structural breaks FMOLS estimates 1970-2016 period market size, real exchange rate, debt-service ratio, education, physical infrastructure, Fraser Institute’s freedom index are economically significant explaining variation stock net country. Dummy variables, designed capture qualitative factors such as impact crises reforms, also included they have their anticipated signs statistically significant. The addresses long-term negative effects rapidly growing profit dividend remittances on financing formation balance payments recent years.