A cluster analysis of FDI in Latin America

Abstract

This study contributes to the literature on FDI in Latin America using cluster analysis, a technique rarely employed in studies on this topic, to examine the FDI performance of Latin American countries. The empirical findings reveal three clusters in 2011, compared to just two in 2005. The cluster with better FDI performance (Chile, Panama, Uruguay, and Costa Rica) also performs better in terms of variables such as market size, trade openness, and human capital. Between 2005 and 2011 Argentina left the best-performing cluster and the cluster with poorer performance split into two, indicating heterogeneous evolution of economies in the region.