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The recent boom of investor-state disputes filed under international investment agreements has fueled a controversial academic and policy debate. We study the impact of these compensation claims on foreign direct investment (FDI) flows to the responding host country. Our econometric analysis focuses on differences in the FDI response from BIT-partner and non-partner countries of developing host countries. This approach allows us not only to distinguish competing hypotheses about BIT function, but also to address endogeneity concerns in earlier studies. We find that BITs stimulate bilateral FDI flows from partner countries—but only so long as the developing host country has not had a claim brought against it to arbitration. Our results provide an additional explanation for the policy-changes observed in many states subsequent to their first experience of an investor-state dispute. [ABSTRACT FROM AUTHOR]

This study examines the effects of greenfield foreign direct investment (FDI) and cross-border mergers and acquisitions (M&As) on government size in host countries of FDI. Using panel data for up to 130 countries for the period from 2003 to 2011, the study specifically tests thecompensation hypothesis, suggesting that by increasing economic insecurity, economic openness leads to larger government size. It is found that greenfield FDI increases labour market volatility and thereby economic insecurity while M&As are not significantly associated with labour market volatility. The main results of this study are that greenfield FDI has a robust positive effect on government size, while M&As have no statistically significant effect on government size in the total sample of developed and developing countries, as well as in the sub-samples of developed and developing countries. [ABSTRACT FROM PUBLISHER]

Based on UNCTAD's database on investor-state dispute settlements (ISDS), we find that many cases raised against developing countries are handled by fairly unbiased tribunals. As for ISDS outcomes, the overall ratio of investor wins over state wins is below one. Nevertheless, it is harder for developing countries, compared to high-income countries, to achieve state wins in international arbitration of investment disputes. Copyright © 2017 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

We argue that competitive diffusion is a driver of the trend toward international investment agreements with stricter investment rules, namely defensive moves of developing countries concerned about foreign direct investment (FDI) diversion in favor of competing host countries. Accounting for spatial dependence in the formation of bilateral investment treaties and preferential trade agreements that contain investment provisions, we find that the increase in agreements with stricter provisions on investor-to-state dispute settlement and pre-establishment national treatment is a contagious process. Specifically, a developing country is more likely to sign an agreement with weak investment provisions if other developing countries that compete for FDI from the same developed country have previously signed agreements with similarly weak provisions. Conversely, contagion in agreements with strong provisions exclusively derives from agreements with strong provisions that other FDI-competing developing countries have previously signed with a specific developed source country of FDI. [ABSTRACT FROM AUTHOR]

Our empirical estimations indicate that Aid for Trade (AfT) granted by OECD donors strengthens the trade relations of recipient countries with other developing countries. By focusing on South–South trade, we mitigate endogeneity concerns that have plagued analyses of trade between recipients and donors of AfT. [ABSTRACT FROM AUTHOR]

Advanced OECD countries are widely held responsible for containing global carbon emissions by providing financial and technical support to developing economies where emissions are increasing most rapidly. It is open to question, however, whether more generous official development assistance would help fight climate change effectively. Empirical evidence on the effects of foreign aid on energy and carbon emission intensities in recipient countries hardly exists. We contribute to closing this gap by considering energy use and carbon emissions as dependent climate-related variables and the volume and structure of aid as possible determinants. In particular, we assessed the impact of aid that donors classify to be specifically related to energy issues. We performed dynamic panel Generalised Method of Moments and Least Squares Dummy Variable Corrected estimations. We found that aid tends to be effective in reducing the energy intensity of GDP in recipient countries. All the same, the carbon intensity of energy use is hardly affected. Scaling up aid efforts would thus be insufficient to fight climate change beyond improving energy efficiency. Copyright © 2011 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

This paper investigates the effects of inward FDI on per capita income and growth of the US states since the mid-1970s. Using a Markov chain approach, it shows that both quantitative and qualitative characteristics of FDI affect per capita income and growth. The empirical findings suggest that employment-intensive FDI, concentrated in richer states, has been conducive to income growth, while capital-intensive FDI, concentrated in poorer states, has not. Consequently, FDI has tended to be associated with weaker rather than stronger income convergence among US states. It appears to be less important whether FDI has been undertaken in the manufacturing sector of US states or in other sectors. [ABSTRACT FROM AUTHOR]

The article analyses the impact of fundamental labour rights on bilateral Foreign Direct Investment (FDI) flows to 82 developing countries. The results indicate that investments by multinationals are significantly higher in countries that adhere to labour rights, thereby refuting the hypothesis that repression of these rights fosters FDI. [ABSTRACT FROM AUTHOR]

Summary: Empirical evidence on the targeting of private aid is largely lacking, even though corporate donors are an increasingly important source of aid. We contribute to closing this gap by performing a case study of Nestlé. The allocation of Nestlé’s aid is compared to that of Swiss ODA and NGO aid, testing for both altruistic and selfish aid motivations. We conclude that Nestlé’s aid clearly lacks focus in terms of targeting poor countries, which appears to be the downside of the strong link between commercial presence and aid. Moreover, according to our Tobit estimations, Nestlé grants more aid to recipient countries with stronger democratic but also more corrupt institutions. [Copyright &y& Elsevier]

Analyzes the determinants of commercial lending to developing countries in 1980s. Background information on bank lending; Conflicting hypotheses on bank behavior under different lending regimes; Equation specification; Empirical results; Conclusions.

In the paper it is argued that imprudent lending by Western commercial banks until the early eighties must be considered as a major reason for ongoing debt problems of Third World economies. In particular the hypothesis is raised that banks followed a lemming-like behaviour in lending to developing countries, that they were subject to risk-illusions or even could discount the risks involved because of incentives to moral hazard. This finally may have resulted in a turnabout of private lenders to rather restrictive lending policies which macroeconomically may be no less harmful.
Different factors like public guarantees, deposit insurance schemes, the activities of international organizations, credit syndications and the roll-over technique are analysed as important determinants of bank behaviour. Furthermore, possible solutions to the ongoing debt difficulties are discussed, with particular emphasis on the interplay between public authorities and private creditors The major conclusion is that the mechanism of market control over bank policies should be strengthened rather than intensifying government regulation. [ABSTRACT FROM AUTHOR]

Focuses on the impact of rising oil prices on economic growth in developing countries in the seventies. Details on the limiting factor for the growth effects of rising oil prices; Importance of industrialization; Difficulty in financing higher oil bills.

Summary Official development assistance (ODA) and foreign direct investment (FDI) are widely perceived to be alternative means of supplementing domestic savings and promoting economic development in low- and middle-income countries. However, possible complementarities of aid and FDI have received limited attention so far. It remains open to debate whether aid could render recipient countries more attractive to FDI by removing specific bottlenecks that prevent higher FDI inflows. In particular, we raise the hypothesis that aid specifically targeted at economic infrastructure helps developing countries attract higher FDI inflows through improving their endowment with infrastructure in transportation, communication, energy, and finance. By performing 3SLS estimations we explicitly account for dependencies between three structural equations on the allocation of sector-specific aid, the determinants of infrastructure, and the determinants of FDI. We find strong and robust evidence that aid in infrastructure is effective in improving the recipient countries’ endowment with infrastructure. In sharp contrast, other aid is not effective in improving infrastructure. Infrastructure consistently proves to be an important determinant of developing countries’ attractiveness to FDI. Consequently, only targeted aid promotes FDI indirectly through the infrastructure channel. In addition, aid in infrastructure has direct effects on FDI. It appears that foreign investors anticipate longer term effects of aid on the country’s endowment with infrastructure and expect aid-financed infrastructure to serve them particularly well. [ABSTRACT FROM AUTHOR]