Abstract

RAMOS, Cristina Isabel. SOVEREIGN RISK AND DIRECT FOREIGN INVESTMENT IN COLOMBIA, 2003-2018. Semest. Econ. [online]. 2019, vol.22, n.52, pp.131-159. ISSN 0120-6346.  https://doi.org/10.22395/seec.v22n52a6.

This study examines the effect of the sovereign risk upon the flow of direct foreign investments in Colombia during the 2003-2018 period. For this three-month data about the Embig (Emerging Market Bond Index Global) is used as proxy for the sovereign risk, IED and a group of control variables.Through a regression analysis with MCO and MMG it is found that the sovereign risk has a strong impact in the entrance of foreign investment, serving as an explanation for the 22 % of the total IED variation. It is also ratified the substantial effect of the sovereign risk over the IED with an impulse-answer function. By controlling via the openness rate and the ICCO, it is concluded that the private agents trust and the international commerce grade are determining in the attraction of foreign capital flows.

JEL CODE: F21, F23, G32, C32.

CONTENTS: Introduction; 1. Literature revision; 2. Direct foreign investment in Colombia; 3. Methodology; 4. Estimation and result; 5. Sturdiness and final considerations; 6. Conclusions; Bibliography

Keywords : Direct foreign investment; Embig; time series; sovereign risk; Colombia.

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