Abstract

This study examines the influence of foreign direct investment, education expenditure, income inequality, trade openness, and government effectiveness on gross domestic product (GDP) growth rates in Chile, Uruguay, and Costa Rica from 2000 to 2019. Using a comprehensive statistical approach, including panel data analysis, time series techniques, and structural break analysis, the research explores how these factors affect economic growth across three similar yet distinct democratic systems in Latin America. The findings reveal that while all variables significantly impact growth, their effects vary in magnitude and direction across the countries, reflecting differences in economic policies and institutional frameworks. Trade openness and foreign direct investment demonstrate the strongest positive influence on growth across all three nations. The study employs data from reputable sources such as the World Bank, International Monetary Fund (IMF), and Organization for Economic Co-operation and Development (OECD), ensuring robust and reliable analysis. Structural breaks identified around the 2008 global financial crisis highlight the impact of external shocks on these economies. The research also considers the unique characteristics of each country, such as Chile’s market-oriented approach, Uruguay’s stronger state presence, and Costa Rica’s emphasis on social development.