What are the key conditions necessary to attract Foreign Direct Investment? Developing an empirical model for the Latin American reality

In this paper, we try to understand what the key drivers for FDI in Latin America are and resolve long standing debates. Doing an analysis on nineteen Latin American countries during the period 1990-2009, we compare the effect of liberal economy reforms made during these years in the region with other important variables like demography, democracy, legal certainty, and human development. The liberal reforms effects are evaluated through the Structural Reform Index (STR), a variable created by Eduardo Lora to measure how reformist in liberal policies each country was during the period 1985-2009. The results show that STR has importance in the short term, but not in the mid and long term. Financial Market Development, Rule of Law, and Human Development are the most relevant variables for investors to take investment decisions in the long term.