Business Environment as a Determinant of Chinese Foreign Direct Investment in Latin America and the Caribbean

Abstract

This thesis examines the relationship between Chinese foreign direct investment (FDI) in Latin America and the Caribbean, host country institutions, and Chinese diplomacy. Given the influx of Chinese investment flows into the region since the early 2000s, the complex relationship between the Chinese state and firms, and warming Sino-Latin American relations, the thesis examines the impact host country business environment and Chinese economic and political diplomacy have on Chinese FDI. The study suggests that while business environment is not likely to deter Chinese investments, China’s diplomatic outreach likely incentivizes Chinese firm internationalization choices. Despite the limitations imposed by the nature of data, my analysis suggests that business environments, Chinese loans, and UN General Assembly voting preferences are not associated with increased Chinese FDI to the region.