Institutional heterogeneity and the inflow of foreign direct investments in the Brazilian economy
DOI:
https://doi.org/10.1590/0101-416146211gljKeywords:
Foreign direct investment (FDI), Institutional environment BrazilAbstract
Given the evolution of the inflow of foreign direct investment in the Brazilian economy and the growing concern about institutional aspects in the countries that receiving and sending this type of investment, the present study aimed to evaluate how the quality of the institutional environment and its heterogeneity has affected the entry of FDI in the Brazilian market in the period 1996-2012. Therefore, estimation of a gravity equation for the flow of foreign investments to Brazil and from its 31 major investment partners were held. The results of this analysis showed that the volume of incoming foreign investment in Brazil is positively affected by the quality of the socio-political and economic-financial institutional environment between the countries of origin and
Brazil. Moreover, the economic and financial institutional heterogeneity proved to be negatively related to the inflow of the foreign capital.
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