Martin Vallejos Tarqui
This study analyses the Foreign Direct Investment (FDI) effects on the macroeconomic dynamics of Bolivi-an economy. For this purpose, a Structural Vector Autoregression model (SVAR) is used. The results show the expected signs according to economic theory, which implies a positive effect of foreign investment on both economic growth and domestic investment. The latter result implies complementarity between domestic and foreign investment. FDI also plays an important role for decreasing unemployment and increasing imports, mainly intermediate and capital goods that are destined to the industrial sector as well as to infrastructure.
JEL classification: C2, O19, O33
Key words: FDI, Economic growth, Economic policies, SVAR model.