INTERNATIONAL PORTFOLIO DIVERSIFICATION: A MULTIVARIATE ANALYSIS FOR A GROUP OF LATIN AMERICAN COUNTRIES

SEVERAL RECENT ARTICLES (most notably Grubel [1968] and Levy and Sarnat [ 1970] ) have used portfolio theory to demonstrate that international diversification can be a major gain from international economic relationships. This article examines international diversification potential among a set of developing countries and determines the feasibility of creating investment unions which provide diversification benefits while meeting the political requirements of participants. The methodology employed, primarily multivariate analysis, appears to be a useful approach to the examination of international diversification of all kinds, whether constrained to small groups of countries or not.