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Abstract

This study focuses on examining the effect of Economic Institutions on Foreign Direct Investment (FDI) inflows in 24 developing Latin American and Caribbean (LAC) countries. This study used panel data over the period 1995 to 2015 , for its emerical investigation, by using a fixed-effects model as suggested by Hausman after controlling for heteroscedasticity. The empirical finding suggests that the counties can attract more FDI if they enhance their economic institutions despite deficiencies in market size, trade openness and high level of human capital. However the development level seems to have an equal importance as that of economic institutions and is significant at all levels in LAC. The study also shows significant relation with controlling variables namely GDP per Capita and human capital.