Strategies for DFI in the Caribbean and Latin America under Trade Liberalization [2009-2022]

This paper determined the differential impacts of factors that affect inward direct foreign investment [DFI] in the Caribbean and Latin America. The variables considered explained 65 % and 66% of the variations in DFI in the Caribbean and Latin America. Of these variables, the capital to labor ratio in the infrastructure group, private sector access to credit in the human capital/private sector group, and the exchange rates in the trade policy group had a stronger positive impact on DFI in the Caribbean than in Latin America. Of the production sector variables, the agriculture sectors had a greater impact than the service on DFI over the [mining and construction] sector. The real interest rate in the monetary/fiscal policy group and the tax on trade in the trade policy group had a more detrimental impact in the Caribbean than in Latin America. In Latin America, the market size in the market group has a greater positive impact on DFI than in the Caribbean, and of the production sectors, the impact of manufacturing was greater impact than the service sector over the other [mining and construction] sector. DFI in the Caribbean has a stronger negative correlation with carbon dioxide emissions in the Caribbean and in Latin America, the political rights variable was more detrimental.