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Introduction : can Latin America compete? / John Price and Jerry Haar -- The macroeconomic environment of competitiveness / Claudio Loser -- Building human capital : is Latin American education competitive? / Jeff Puryear and Tamara Ortega Goodspeed -- Competitive capital markets : Brazil's capital markets finally maturing / John Welch -- Consumer & small business credit, building blocks of the middle class / Jan Smith, Tricia Juhn, and Christopher Humphrey -- Closing the technology gap / Peter Knight and Rosane Marques -- Fostering innovation : technological innovation in urban clusters / Isabel Bortagaray and Scott Tiffin -- Return on infrastructure investment : focus on water / Lee Tablewski -- Logistics & transport services / Marcio Stewart -- Legal reform : some emerging paradoxes of Latin America's legal and judicial reform movement / Linn Hammergren -- Property, the rule of law, and development in the Americas / Peter Schaefer and Clayton Schaefer -- Tax reform : tax policy, reform, and competitiveness in Latin America / Mauricio Carrizosa -- Labor reform : under competitive economies and unprotected workforce / Christopher Sabatini -- Regulatory reform : increasing competitiveness through regulatory and investment climate improvements in Latin America : the case of Mexico / Luis Guasch and Benjamin Herzberg -- Public safety : the cost of living dangerously / John Price -- Lessons learned and looking forward / Jerry Haar and John Price

This paper is an empirical analysis of the effects of foreign direct investment (FDI), institutional quality and the size of a government on venture capital (VC) activity. We conclude that institutional quality, the FDI and public spending have definitive importance as elements for the development of a public policy that increases the quantity and quality of venture capital fund (VCF) investment. Higher institutional quality, higher FDI and lower public spending allow the VCF investment volume to grow. The FDI shows higher level of significance in promoting investment in high-tech companies and institutional quality increases the productivity of FDI investment in the generation of VCF. Government spending dramatically and adversely affects the activity of VCF and institutional quality increases the negative effect of government spending on the activity of VCF in emerging countries. This last result suggests that the higher the institutional quality of a country, the less state intervention it requires to promote investment of VCF. The results are consistent with the hypothesis of the FDI spillover and crowding out of public spending.