Inversión Extranjera

Foreign direct investment (hereafter FDI), appears as en effective mechanism to stimulate economic growth in developing countries, their access to technology and encouraging their incorporation in international global markets. Basically, it is self evident that FDI promotes important benefits to both main participants: foreign investors and host countries. Although most of these benefits are intangible, it is arguable that overall FDI is a key factor in deciding economic growth.

Regarding the empirical advantages produced by the FDI, international global trends ratified the significant benefits produced by FDI, especially in Latin America. According to the Economic Commission for Latin America and the Caribbean (ECLAC), Latin America experimented an exponential increasing of FDI in last decades due to its constant economic development. While in 1993 the region received nearly US$10 billion in FDI, in 2011 Latin America the FDI inflows reached its highest level peaked in US$154 billion approximately.

Chile is not the exception of this international investment trend. According to the OECD, Chile also experimented a dramatically rising in FDI inflows in the last decades. While in 1996 Chile received nearly US$4 billion in FDI, in 2007 the inflows reached its maximum level jumped to US$17 billion approximately.

But what are the reasons of this trend? what are the key variables that determine which state or country are most attractive to invest? How efficient and effective are these aspects? Do international investments treaties and domestic rules of law play an important role to determine the country to invest? The objective of this paper is to determine which factors are relevant to take into consideration by the foreign investors and therefore to apply by the host country in order to create a stable environment that promotes FDI.

These are some issues that this essay will approach. The structure of this paper follows the guidelines of what we believe the rational procedure for understanding why a foreign investor will decide to invest in Chile and how Chile is doing to attract FDI.

First, we will briefly describe the main factors that foreign investors take into consideration before invest. At the same time, we will expose the reasons of Chile to establish and continuously improve a mechanism to promote FDI.

...