Ligianne Carvalho da Silva Dâmaso
Doctorate – Determinants of FDI in Electric Power in Latin America
Advisor: Profs. Drs. Nuno Manoel Martins Dias Fouto
Comission: Profs. Dr. Virginia Parente de Barros, Paulo Roberto Feldmann and Fabiana Lopes da Silva
Latin America has taken a prominent position in recent years as one of the most attractive markets for FDI: the region received approximately 25% of the total volume of foreign direct investment geared to developing countries, an average investment per year equivalent to 10% of the global FDI flow for the 2007-2017 horizon. When assessing the complexity of the Electric Power sector and the Generation, Transmission and Distribution segments, one is faced with a deeply regulated sector, which raises even greater challenges for this sector to be in fact competitive in attracting investments. From this perspective, this study seeks to investigate what the potential determinants are that directed the receipt of FDI flows in electric power in Latin America, highlighting the peculiarities and potential strategic implications. To this end, the FDI in electric power in 11 Latin American countries was analyzed, in addition to its respective determinants in the economic and political-institutional dimensions. Subsequently, the data analysis was developed using the following econometric techniques for the identification of the parameters of the equations: linear regression models of static (fixed effects and random effects) and dynamic (Difference Generalized Method of Moments) panel data. The determinants - market potential, interest rate, trade liberalization, government effectiveness, and FDI in electric power with one period lag – were seen to produce significant effects on the attractiveness of FDI flows in electric power in Latin America in the period between 2007 and 2017. The main conclusions are that these determinants behaved in a manner that adhered to the particularities of the region, especially for cases where the opposite signals to those expected for some determinant coefficients may have been a reflection of Brazil's presence in the sample. Brazil attracted a significant volume of FDI in electric power despite its low GDP growth compared to a part of the countries under analysis, which may have contributed to the negative signal of the market potential determinant. In theory, Brazil's high interest rate and low trade liberalization level could have distorted the expected negative signal for the coefficient of the interest rate determinant and the predicted positive signal for the estimator of the trade liberalization determinant. In addition, during the discussion of the results, some strategic implications of an economic, political and institutional nature were identified that could contribute as important reflections or even as a starting point in the public policy development context of policymakers and the government for the encouragement of FDI in electric power in Latin America.
*Abstract provided by the author