Empirical Economic Bulletin, An Undergraduate Journal


Since the early 2000s, member countries of the Union of South America Nations (UNASUR) have moved drastically to the left of the political spectrum and have implemented protectionist economic reforms. Contrary to what many studies and scholars have concluded, the political realignment of the region and the implementation of protectionist policies has had a positive effect on foreign direct investment (FDI) inflows into the region. For the past two decades, total FDI inflows into the region has increased drastically from $8 billion to $150 billion. This study found that there is a combination of both economic reform and governance variables which continues to foster a positive business environment for foreign investors within UNASUR member countries. The variables that proved to be most significant were: protection of property rights, credit availability, control of corruption, regulatory control, and government effectiveness.